Evidence of Fueling of the 2000 New Economy Bubble by Foreign Capital Inflow: Implications for the Future of the US Economy and its Stock Market

摘要

Previous analyses of a large ensemble of stock markets have demonstrated thata log-periodic power law (LPPL) behavior of the prices constitutes a qualifyingsignature of speculative bubbles that often land with a crash. We detect such aLPPL signature in the foreign capital inflow during the bubble on the USmarkets culminating in March 2000. We detect a weak synchronization and lagwith the NASDAQ 100 LPPL pattern. We propose to rationalize these observationsby the existence of positive feedback loops between market-appreciation /increased-spending / increased-deficit-of-balance-of-payment /larger-foreign-surplus / increased-foreign-capital-inflows and so on. Ouranalysis suggests that foreign capital inflow have been following rather thancausing the bubble. We then combine a macroeconomic analysis of feedbackprocesses occurring between the economy and the stock market with a technicalanalysis of more than two hundred years of the DJIA to investigate possiblescenarios for the future, three years after the end of the bubble and deep intoa bearish regime. We also detect a LPPL accelerating bubble on the EURO againstthe US dollar and the Japanese Yen. In sum, our analyses is in line with ourprevious work on the LPPL ``anti-bubble'' representing the bearish market thatstarted in 2000.