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"Doom & Gloom" (Made in America)

For a summertime market, let alone the fourth week of August, this one is playing out right on cue.....data in the US confirming a doom & gloom scenario in the housing sector, continued talk from pundits across both sides of the aisle about the need for Washington to create jobs and to create a business-friendly environment (if not at least a more certain one), and continued anticipation of the degree to which Bernanke can waft air towards the simmering economy to ignite the fires of the US growth engines without much (any?) help from fiscal policy. 

With all of that, in addition to generally thin markets due to vacation schedules on Wall Street, Main Street and every street in DC, this week has witnessed rather listless markets, with an overall negative tone, despite yesterday's uptick and this morning's green on the screens.

But is the Doom & Gloom story applicable to the global stage?  Or is it 'made in America' for America?!  I believe the latter.  Why?  A quick flyover other parts of the planet show some pretty robust activity.....witness:

  • the surge in M&A activity (most notably BHP Billiton/Potash, Dell or HP/3Par and others)
  • IPO activity on the rise (add today's reports that the Danish company ISS is considering a $7bn+/- IPO)
  • refinancing activity by corporations all over the world issuing long-term debt at low rates, further improving already healthy balance sheet strength
  • almost a daily listing of significant cross border investment activity especially in Asia, often involving the race to control resources, metals and energy (witness today's story of Adani, a conglomerate in India, signing a deal to build a railway and coal terminal in southern Sumatra, Indonesia).
  • there is still a long list of countries who have tightened rates in recent months to slow down potentially overheated economies.
  • finally (for now), listen to corporate CEO's, the majority of them, who continue to be outspoken and have focused on cost reductions, improved operating leverage, global expansion, historically high cash positions, low levels of debt, and a desire for US regulatory and tax policy to become more clear, understandable and globally competitive.
Net net?  This is not a call to go 'crazy long' and extend equity exposure to the limits.  But it is a reality check on the more complete global picture that augurs far more optimistically for overall equity valuations than does the myopic focus on the current US scene.

There have been many stocks that have been battered, if not bruised, in the past couple of weeks.....I'm watching closely, and patiently, for entry levels on the ones that have global businesses, strong management, healthy balance sheets, and are leaders in their space.
But patience prevails.

More later.
Ed

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Disclosure: No positions in BHP Billiton, Potash, Dell, HP, 3Par