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Liquidity’s Drying Up For Non-US Corporates
I talk (we, all of us, talk) a lot these days about US "exceptionalism."
Once upon a time, the American exceptionalism discussion was a geopolitical topic, but more recently it's come to define the macro-market narrative.
I'll recycle some familiar (ad nauseam by now) language. The US economy's not just the proverbial "cleanest dirty shirt," it's the only clean shirt in a world full of dirty ones. And US equities are, quite simply, the only game in town.
"US equities are now 63.06% of the Van
This sort of thing has happened before. Even in the 1960s, when corporate strategy became the main source of growth, the few companies that were high performers had to be in every managers portfolio. There was only so much of the “good stuff” to go around and fund managers had to be careful not to unintentionally become controlling entities in their investment targets. Rather than investors being the main buyers of stocks, other companies like P&G, Kraft, GE and their ilk were the buyers. Corporate strategy was becoming king. Now big stocks aren’t necessarily big companies. Price to sales ratios are 10-20x and more. Financial engineering has taken over. Companies have only so much prospective room for real growth. Only financial growth is available. The underlying support for corporate growth is fading. This cannot be good. It wasn’t in the 1960s (16 dead flat years on the DJIA) and soon it won’t be again.
Thank you for your post.
H-Man, when your the only game in town, no surprise the chips find you.