While its only one week and much can change, in looking at the pullback
in the stock market this week, I believe one can glean a trend that we
may see over the next few years in those groups that have underperformed
the overall market this week. On the belief that the US economy was the
first one into the global recession (as the bulk of the imbalances
occurred here) and will be one of the last one’s out for the same
reason, I believe the key to outperformance on the long side will be
having exposure to non US dependent co’s and sectors. As 86% of the
world’s population is outside of the developed world and the developing
world ironically has a better balance sheet than the US consumer and
government, emerging market land is where most of the growth will be on
any global rebound. I know this is not a new revelation as it was the
theme of the prior expansion but I believe it will resurrect itself on
any recovery. As measured by the ETF’s, XRT, XLY, XHB, XLF and IYR,
consumer discretionary including retail, financials, housing and REITS
have been the worst performing sectors this week in the S&P as all are
predominantly US dependent of course. The perfect pair trade IMO is thus
short US and long anything outside of it.
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Miller Tabak + Co., LLC believes to be reliable, its accuracy and
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purposes only and under no circumstances is it to be construed as an
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we may have positions in and effect transactions in securities referred
to herein. Any recommendation contained in this report may not be
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been obtained from sources we believe to be reliable, the accuracy and
completeness of such information and the opinions expressed herein
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