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This seems to be a classic example of the “cleanest dirty shirt” phenomenon.All around the world, investors are particularly interested in US stocks, according to Citi’s Tobias Levkovich. Really.
Nearly two weeks of meetings with investors in London, Zurich, Geneva, Frankfurt, Milan, Tel Aviv, Brussels, Rotterdam, The Hague and Athens yielded a remarkably higher degree of interest in US equities than we expected. Indeed, the expressed attitudes towards American stocks probably were the most positive that we have seen in years. Fears around European structural problems, sovereign debt woes, banking sector stress and even the soundness of the Euro were probably the most cited issues and they seemed to overwhelm America’s problems with deficits and debt despite the failure of the Super Committee on finding both spending cuts and revenue sources.
He goes on to drill into a specifics:
Thus, it is not that surprising that US equities were drawing interest. Note that corporate credit conditions are better in the US as shown in previous reports and this may be causing real problems for European companies and for banks that might need capital. In the past week, Thomas Cook and Commerzbank have upset shareholders regarding capital needs and there are reports that trade finance is drying up as well in Europe, with shipping companies we have talked to highlighting such problems too. Furthermore, some fund managers expressed concern that lending to Eastern Europe and a few other emerging economies could be affected negatively as well by a retreat of European banks that need to retain capital. In addition, the latest spate of manufacturing news out of China have added to the perceived nervousness, particularly reports on PMI, factories closing due to a decline in exports to Europe and even news reports regarding worker unrest.
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