I would like some fresh insight from today's posting.
The phenomenon that I am interested in has taken broad hold of activity in today's equity markets. I have seen it in the latest August Buy-side Strategist Survey that Zacks does. In this survey, the dominant global/regional idea is "anything non-US" is to be avoided. Which means "Buy USA".
And I have seen it in-house picks made by a variety of Zacks stock strategists.
- Housing recovery in the USA, so buy a luxury home builder like Toll Brothers (TOL) and building materials company Lousiana Pacific (LPX).
- Strong USA auto sales, so Lithia Motors (LAD). Buy S&P USA market dominated Polaris (PII).
- And on the flipside, a Downgrading of Textainer (TGH) on weaker global growth playing out in weaker cargo container demand.
What I have seen in the last few months is that it is "Buy USA", and "Sell anything else non-USA".
This confuses me.
As a top-down guy, the latest real GDP growth report for the USA puts this economy at a +2.2% growth rate in 2012. And for 2013, the consensus is for +2.4% growth. Meanwhile, while we have seen a downgrading in growth expecations for the Rest of the World, the IMF has global growth rates declining from +3.3% this year to +3.1% next year. There are still notably higher growth rates outside the USA.
In addition, I finished reading a research report this morning. In it, the author stated car sales growth in a variety of country outside the USA. For the first six to seven months of 2012, care sales rose smartly. In Russia (+14% yr-yr), India (10%), Indonesia (+26%), Brazil (+24%), Mexico (+12%) and South Africa (+11).
This strikes a simple-minded guy like me as a theme: Everybody is in the "Seen-One-Seen-Them-All" camp on global investing. Contagion is no longer an avoid Europe phenomenon. It is an avoid anything non-USA phenomenon.
However, when you look at the underlying growth rates outside the USA, they are still above what can be found inside the USA.
My debating questions for all of you...
What catalyst or series of events causes this USA-only trade wind up and what will cause it to unwind?
Why do you buy USA right now, and why do you avoid the Rest of the World?
Isn't there a fundamental growth opportunity to chase outside of Europe?
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