Foreign investment in US plunged 32%

Foreign investment in the United States dropped 32% in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. The largest chunk of last year's foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan. Europe as a whole accounted for 40 percent of new foreign investment in the U.S.The figures come amid increasing trade tensions between the U.S. and several top economic allies.

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the figure is representing the second year of decline after a peak in 2015 when foreign investors' expenditure in the US hit $439.5 billion. I am sure 2018 will be worse. See the pattern?

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2 minutes ago, Joanna said:

the figure is representing the second year of decline after a peak in 2015 when foreign investors' expenditure in the US hit $439.5 billion. I am sure 2018 will be worse. See the pattern?

Why is this a bad thing?

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10 minutes ago, Ja’Nako Bezze said:

Foreign investment in the United States dropped 32% in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. The largest chunk of last year's foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan. Europe as a whole accounted for 40 percent of new foreign investment in the U.S.The figures come amid increasing trade tensions between the U.S. and several top economic allies.

our allies hiding money into mattresses 

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4 minutes ago, mthebold said:

Why is this a bad thing?

Less money in the economy, for starters. I really cant see hoo to twist this and make it as victory

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1 minute ago, Joanna said:

Less money in the economy, for starters. I really cant see hoo to twist this and make it as victory

Acquisitions of US companies are already part of the economy. These new figures about the decline are pre-trade tiff. The tariffs may actually boost foreign investment by companies that want to avoid the tariffs.

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Just now, JohnAtronis said:

Acquisitions of US companies are already part of the economy. These new figures about the decline are pre-trade tiff. The tariffs may actually boost foreign investment by companies that want to avoid the tariffs.

All I read recently is US companies moving the production abroad 

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2 minutes ago, JohnAtronis said:

Acquisitions of US companies are already part of the economy. These new figures about the decline are pre-trade tiff. The tariffs may actually boost foreign investment by companies that want to avoid the tariffs.

Explain that Elon Musk and Harley. Even Warren Buffett is big into Chinese electric car technology and manufacturing

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14 minutes ago, Joanna said:

the figure is representing the second year of decline after a peak in 2015 when foreign investors' expenditure in the US hit $439.5 billion. I am sure 2018 will be worse. See the pattern?

rate last year dropped to levels similar to 2014 and the years before the financial crisis. That is the pattern I am worried about

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and there I thought the tax bill was going to bring more foreign investments.

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29 minutes ago, Ja’Nako Bezze said:

Foreign investment in the United States dropped 32% in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. The largest chunk of last year's foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan. Europe as a whole accounted for 40 percent of new foreign investment in the U.S.The figures come amid increasing trade tensions between the U.S. and several top economic allies.

It tells us that foreign investment is down because they feel American equities / securities are too expensive to buy at current levels. Just pay attention to are investments in US Treasuries. The next major auction is next week

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20 minutes ago, mthebold said:

Why is this a bad thing?

watch the market slide

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32 minutes ago, Ja’Nako Bezze said:

Foreign investment in the United States dropped 32% in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. The largest chunk of last year's foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan. Europe as a whole accounted for 40 percent of new foreign investment in the U.S.The figures come amid increasing trade tensions between the U.S. and several top economic allies.

Capital is flowing toward China already

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29 minutes ago, Joanna said:

the figure is representing the second year of decline after a peak in 2015 when foreign investors' expenditure in the US hit $439.5 billion. I am sure 2018 will be worse. See the pattern?

Other angle is that 50% of profits for US business come from sales abroad and that trade war we started is going to create major problems in our economy.

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Just now, 李伟王芳 said:

Other angle is that 50% of profits for US business come from sales abroad and that trade war we started is going to create major problems in our economy.

Eventually the trade war is going to hurt profits big time.

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(edited)

I think with the UK leaving the EU it would be a good opportunity to explore the possibillty of an Anglosphere Free Trade Zone (with the possibility of free movement of Labour (but no unearned welfare entitlements)

Core members would be the USA, UK, Australia, Canada (if Turdeau would allow it), New Zealand. 

open to the Rep of Ireland and possibly middle income Caribbean and Pacific Island states. Could also consider countries such as Singapore, Iceland, Norway and Switzerland. 

What are the advantages?

  • We all share one common language
  • We have comparable states of wealth per head of population 
  • We have very similar legal systems
  • Standards across those countries are broadly similar
  • We are all Democratic 
  • Rates of corruption are relatively low. 
  • Next time the EU says 'we are the biggest trading block' we can laugh at them. 

 

Edited by NickW
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38 minutes ago, Ja’Nako Bezze said:

Foreign investment in the United States dropped 32% in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. The largest chunk of last year's foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan. Europe as a whole accounted for 40 percent of new foreign investment in the U.S.The figures come amid increasing trade tensions between the U.S. and several top economic allies.

What happened to "America Open for Business"?

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Just now, Stephen said:

What happened to "America Open for Business"?

that was long time ago

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21 minutes ago, 李伟王芳 said:

All I read recently is US companies moving the production abroad 

Not only that. Imagine how these numbers will look in a few months now that BMW, Honda, Toyota and Huyndai are all downsizing production in their US plants.

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50 minutes ago, Ja’Nako Bezze said:

Foreign investment in the United States dropped 32% in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. The largest chunk of last year's foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan. Europe as a whole accounted for 40 percent of new foreign investment in the U.S.The figures come amid increasing trade tensions between the U.S. and several top economic allies.

As in 2016, the vast majority of foreign investment came from the acquisition of U.S. businesses, which accounted for 97.5 percent of all new foreign investment in 2017. Only $6.4 billion of the overall investment was aimed at establishing new U.S. businesses or expanding foreign-owned U.S. business.

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I think part of it, too, is that China pretty much has what it wanted from the US in terms of tech and now it's focusing on building up its homegrown companies. 

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2 hours ago, Joanna said:

Less money in the economy, for starters. I really cant see hoo to twist this and make it as victory 

Whether this is a "victory" depends on the nature of the investments.  Three potentially negative consequences immediately come to mind:

1)  The trade war is showing how selected investments in politically sensitive markets can give foreign countries disproportionate control of the US political system.  That's an enormous risk in exchange for a little money

2)  Mergers and acquisitions look good on paper, but they frequently destroy businesses.  The purchasing company may take the intellectual property and brand while axing the production.  Local communities end up devastated, the citizens of those communities no longer learn, innovate, and produce, wealth gets funneled back to foreign countries, welfare systems are burdened etc.  Just because there's an "investment" doesn't mean long-term value was created. 

3)  Global supply chains introduce low probability/high impact risks.  E.g. the potential for black swans.  Current economic performance measures aren't designed to account for these, so we can expect much of the "value" created by globalism to undue itself in a catastrophic manner.  Nassim Nicholas Taleb's "Incerto" series is a great introduction to this concept. 

Of course, there are good investments.  Having worked in manufacturing and seen what Japanese manufacturing philosophy has done for the world, I would welcome a Japanese company with open arms and exhort everyone who will listen to learn from them.  That's not every culture though. 

Foreign investment is complex.  For that reason, I don't take it as gospel that it's always a good thing. 

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2 hours ago, Meanwhile said:

watch the market slide

Maybe.  There are many factors affecting the market, of which foreign investment is one.  My impression of Trump is that he pulls levers to improve the domestic economy as he simultaneously pulls levers to reduce foreign risk.  The net result is a relatively stable stock market and growing American strength. 

How he played this is interesting - and brilliant.  Immediately following the election, stocks rose.  This contradicted the conventional wisdom that a Trump presidency would crash the market.  Having destroyed that myth, he and the Republicans passed a tax reform which in itself turned the US into an engine of growth.  The push for deregulation was icing on the cake.  We're all accustomed to looking at stock prices, but publicly traded stocks are a minority of the US economy.  Trump gave the entire US economy - private companies included - reason to invest.  With domestic growth set in motion, we saw a consistent increase in stock prices through 2017 alongside lower unemployment and increasing confidence.  He was undoing Obama's legacy of fear, scarcity, and dependence.  By late 2017, Trump had the US where he wanted it:  domestically strong and confident in further growth. 

That's when we started seeing tariffs and tough foreign actions.  Stocks ran up through 2017 because we needed the confidence boost, but once our domestic strength was proven, Trump could begin weaning us off foreign control and unknown risks.  If you read a lot of news, you'll notice that Trump does something the market fears one day, driving down stocks.  Shortly thereafter, something good happens, lifting them back up.  Stock prices have bounced in a narrow range since January.  There are winners and losers, of course; I wouldn't want to be the guy who bet on trade with China.  The net effect, however, is that our domestic strength is growing as our dependence on foreign trade and needy allies wanes.  We're getting growth without the risks. 

He did all this when everyone - even his own party - thought it impossible.  Whether or not you agree with his direction, it's hard to deny he has led us there brilliantly. 

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2 hours ago, 李伟王芳 said:

Other angle is that 50% of profits for US business come from sales abroad and that trade war we started is going to create major problems in our economy.

You could equally argue that China's debt, lack of transparency, and tendency to screw foreign companies create serious business risks.  US companies may be better off reducing their exposure to China. 

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For foreign companies investing in the US is becoming a liability.  The more you invest in the US the more you are exposed to US sanctions.

The European or Asian companies having heavily invested in the US or heavily depending of the US market are now the more exposed to Trump's blackmails (pull out of Iran or face sanctions... don't work on the  North Stream 2 pipeline or face sanctions...).

Is it still worth to invest in the US if this imply risking huge fines or loosing many other markets to please the US administration vagaries ?

 

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