Buy American, Europe’s largest asset manager says


Sometimes an outsider is needed to fully appreciate something.

Europe’s largest asset manager, Amundi Asset Management, has produced research showing why US stocks have outperformed the world, and why this may happen.

Written by two from his Boston office – Craig Sterling, his head of US equity research, and Marco Pirondini, head of US equities – Amundi made a distinction between the US stock market, one of several most profitable companies in the world. And the American economy.

S&P 500 SPX,
-0.64%
Measured by MSCI Europe, Australia and Far East index 990300, surpasses the rest of the developed world,
+ 0.87%,
19 out of the last 30 years, and with a cumulative return of 1574% vs. 235%. This is not an accident, as US companies have higher profit margins and consistently top the cost of capital.

Amundi hopes that a similar performance will continue in the future.

“As we assume in the aftermath of the epidemic and recession, we believe that economic uncertainty has created a lack of clear earnings visibility, which will likely affect even lower-returning companies even more. The vesting in non-US equity markets Beyond reduced investment in innovation, technology and healthcare, structural and economic pressures persist as development capital expenditures are halted, ”it says.

While US valuations are not cheap, investors get what they pay for, with better cash flow on investment.

The US dominance in technology has a lot to offer, which the Amundi duo hopes to continue. “A combination of world-class universities that develop technology and serve as a launching pad for startups to commercialize it, due to a well-developed venture capital industry and a cultural will to take risks. Other regions of the US find it difficult to cross the US. , ”The pair says, only China proves to be a viable global competitor.

In addition to technology, monetary and fiscal policies that place greater emphasis on the stock market are an advantage for US equities, as there are major threats to shareholder activism and mergers and acquisitions activity. It adds that lower taxes and a flexible labor market boost US markets.

Uniquely, the pair supports the corporate culture of stock buybacks, which are much less prevalent outside the US “A major advantage of share repurchases is that they enable the recycling of capital throughout the economy, so capital is the most innovative.” May end up in the hands and not get trapped inside less efficient, more mature companies.

The buzz

According to data from the COVID-19 tracking project, there were 53,507 new coronavirus cases in the US on Tuesday, at a three-week low. Meanwhile, China reported its highest outbreak in weeks – 101, as Japan and South Korea are also leading the way.

It’s a big day in Washington, DC, where Amazon.com AMZN, chief executives of the world’s largest tech companies,
-1.79%,
Apple AAPL,
-1.64%,
Facebook fb,
-1.44%
And the alphabet GOOGL,
-1.68%
The house will be visible through videoconference in front of the Judiciary Antitrust Subcommittee starting at noon. The Federal Reserve announces its latest interest rate decision at 2 pm, and Chairman Jerome Powell will hold a press conference at 2:30 pm. Negotiations are expected to continue on the new stimulus bill, including $ 600. Additional unemployment benefit is extended in the week.

Earning season continues, General Electric GE,
+ 2.68%
Reported a broader-than-expected loss but better-than-expected revenue and cash flow.

AMD, advanced micro devices
-1.97%
The microchip company reported second-quarter earnings, which beat expectations and raised its full-year forecast. Starbucks SBUX,
-2.38%
Losses were reported at a 40% drop in same-store sales, but the coffee chain’s stock rose in prepaid trade. Software Company Shopify Shop,
+ 0.88%
Stronger earnings than forecast rose after the report.

market

After a 205-point drop in the Dow Industrial DJIA,
-0.77%
US stock futures ES00 on Tuesday,
+ 0.19%
YM00,
+ 0.06%
NQ00,
+ 0.48%
Pointed off to a brilliant start.

Gold GC00,
+ 0.40%
And silver SI00,
+ 0.67%
Futures advanced.

Yield at 5 years UK gilt TMBMKGB-05Y,
-0.105%
Reached a record level of -0.135% before bouncing high.

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