It’s Friday and you know what that means… time to go to the charts!
You’ll recall that at the end of each week, I try to let some graphics do the talking. As they say, a picture is worth a thousand words.
This week, I’m dishing on patriotism, the world’s least favorite investments, the future of retailing and, of course, that darn real estate recovery many readers simply refuse to accept.
An Early Reason to Be Patriotic…
Forget about Independence Day being only weeks away. Get your patriotism on early because U.S. stocks are outperforming the rest of the world.
That’s right. Despite non-stop, obnoxious prognostications that the U.S. economy and stock market are unavoidably doomed, it’s just not happening.
U.S. stocks are trouncing global stocks.
A rising line in the chart above indicates the S&P 500 Index is outperforming the MSCI World (ex-U.S.) Index.
Bottom line: Ever since the Great Recession hit, U.S. stocks have been the best place to invest. The future looks bright, too, based on the latest momentum.
As Bespoke Investment Group notes, “The S&P 500’s relative strength is currently at its highest levels relative to the rest of the world since September 2004.”
So break out the 1980 Winter Olympic, Miracle on Ice-inspired chant… “U-S-A! U-S-A! U-S-A!”
Anything But European Stocks and Bonds, Please!
My late grandfather loved to say, “Watch what they do, not what they say.” And if you want more proof that U.S. stocks are the place to be, check out the latest fund flow data from EPFR Global.
Investors are scared stockless – and bondless – of Europe.
Last week, Europe equity funds posted outflows for the tenth time in the past 12 weeks. And Europe bond funds experienced the biggest weekly outflow since early December.
(FYI – China was a loser, too, and rightfully so, with outflows of $404 million, a 25-week high.)
What investors yanked out of the market, though, didn’t end up under the mattress.
A little more than $8.12 billion ended up in U.S. equity funds. And another $2 billion landed in U.S. bond funds.
Bottom line: U-S-A! U-S-A! U-S-A!
Video Killed the Radio Star… and Amazon Killed Best Buy
Since then, however, as consumers have shunned big box retailers – particularly electronics stores – the stocks have gone separate ways.
Bottom line: The future of retailing is online. That’s good news for Amazon, but bad news for Best Buy. In fact, the latter appears destined to join Circuit City on the courthouse steps. Seriously.
Is Good Credit a Bad Thing?
We got more encouraging news on the real estate recovery this week.
Single-family housing starts jumped 3.2% in May. And building permits surged 7.9%, close to a four-year high.
Yet early this week, a Wall Street Journal article bemoaned the fact that only the most creditworthy Americans are getting mortgages.
In 2011, almost 90% of all new mortgages went to creditworthy households, compared to about half before the financial crisis, according to Moody’s Analytics and Equifax.
Did I miss something? Didn’t too much easy credit for less-than-qualified buyers (i.e. – subprime) get us into the whole real estate mess?
Bottom line: Real estate lending might be extremely lopsided right now. But that’s a good thing! A true recovery can’t be built on the backs of the financially insecure.
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Thanks and enjoy the weekend!
Ahead of the tape,