Richard Bernstein Explains Why Investors Are Way Too Bullish On The BRICs, And Way Too Bearish On The US

In a note recently published on his site (.pdf), Richard Bernstein argues that there’s a massive disconnect between how investors view the BRIC nations, and what the actual economics on the ground are indicating (via PragCap).

Whereas investors have suddenly become pessimistic on the US, it’s actually those emerging markets flashing the brightest recession warnings.

Now bear in mind, this was first published in early June, and some of the data has already gone out of date, given what a month it has been, but it’s still interesting.

First he notes the yield curve, which is still very sharp in the US, and much flatter abroad (flatness usually being an indicator of bearish tidings).

chart

Photo: Richard Bernstein Advisors

Where else do you see this huge disconnect?

Try this one:

chart

Photo: Richard Bernstein Advisors

Again, Q1 does seem like ages ago. Even May 31 seems like ages ago, but the reality of the flattish yield curves in the BRICs is noteworthy, and with so much attention being paid to the US and Europe, it’s pretty reasonable to argue that this needs more attention.

 

 

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