Misdirection

According to the FT,

Foreign demand for US equities has risen to its highest level since the September 11 2001 terrorist attacks, says UBS, the Swiss bank.

Well, that's a relief. But wait a second what's this?

The most recent cross-border portfolio flows data from the US Treasury paints a more mixed picture. Overseas investors bought a net $14.5bn of US equities in November, the highest figure since May 2001. But US investors trumped this, buying a net $16.1bn of foreign equities, the highest monthly outflow in the series' 27-year history.

However the December data, due to be released next month, may well show net equity flows turning positive for the US for the first time since December 2003. The S&P 500 hit a 40-month high in late December and BoNY reports an 81 per cent correlation between its proprietary flows and the performance of the market index.

Perhaps instead of "Foreigners swoop on US equities" this article should have been called "Americans get the hell out of dodge".

I would imagine the netflows are really the kicker otherwise all we are seeing is increased globalization in asset markets. This does not make a very dramatic headline I guess.