Investing in the US is best

American manufacturers are fueling the recovery here as Europe quakes and China's growth gets relatively worse.

By TheStreet Staff Nov 1, 2011 6:31PM

By Lindsey Bell, TheStreet TheStreet

 

If you can keep your head when everyone else is losing theirs, you may be able to hold on to investment gains this year.

 

After Greek Prime Minister George Papandreou stunned the world by announcing a referendum on the new European bailout plan, stocks tumbled in Europe and the United States. That news overshadowed a U.S. October manufacturing report that suggested America is still a good place to invest.

 

Still, manufacturing in China and the U.S. slowed in October, which was unsettling to investors who expected to see gains in both countries. Those two reports, compounded by the eurozone's instability, set the stage for big declines in the market.


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But earnings results are showing a disconnect with the U.S. report. Ford (F), Caterpillar (CAT), DuPont (DD) and other manufacturers have said in recent earnings reports that sales growth is accelerating in the U.S. and decelerating in China.


Investors may be undervaluing those and other U.S. bellwether stocks, discounting them on expectations for slowing growth in the U.S. The manufacturing report from the Institute for Supply Management would seem to support this theory, but I take the opposite view. North American manufacturers are fueling the recovery in this country and quality stocks may be worth considering buying now.

 

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First out Tuesday was China's Purchasing Managers Index, which measures manufacturing. The gauge slowed to 50.4 in October from 51.2 a month earlier, the lowest level since February 2009.

 

The U.S. ISM Manufacturing Survey decreased to 50.8 in October from 51.6. Economists were forecasting an increase. As companies shrunk inventory to reflect demand, growth was diminished. A level above 50 represents growth in the manufacturing sector, whereas a level below 50 represents contraction. Still, an index above 42.5 generally indicates an expansion in the overall economy.

 

To be sure, China is still in expansion mode, growing at a faster pace than any other leading economy. The moderation in growth is partly being driven by the government's attempt to rein in inflation and bubbles. Interest rates have been increased three times and the reserve-requirement ratio was lifted to cap inflation, which now is running at a three-year high. Unlike the U.S., the Chinese government has the ability to reverse the monetary tightening that was implemented over the past few years.

 

The U.S. economy is slowly emerging from the Great Recession and the manufacturing sector is in the driver's seat. Growing demand from emerging markets and increased capital investment domestically should help drive increased order volume going forward. What's more, domestic companies have the advantage of a tax depreciation allowance on equipment bought before the year ends.

 

Tags: CATDDF
8Comments
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Yeah, go team!

USA! USA! USA! (yes ,that was sarcasm)

 

I believe we're still one of the great manufacturing nations, but until somebody reins in the Wallstreet whack jobs, it will be an uphill battle my friends. 

 

All the latest financial intel suggests that the guys in ties slithering around S. Manhattan aren't taking any of the tar and feather mobs seriously...in fact, you'd think it was quite the opposite.

 

When former Wallstreet junkies call out their own kind and say that enough is enough, by God, I think somebody should start listening!

Former U.S. Senator and Treasury Secretary and Nicholas Brady wrote a column in the Washington Post recently stating how Wallstreet drifted away from it's roots. Financing the nation's industrial capacity and infrastructure was the order of the day in the decades following WWII. This mutually beneficial arrangement between the financial and manufacturing world propelled the USA to superpower status. When was the last time you heard that term?

 

Since the '80s (and possibly much earlier), the financial investment firms morphed into some kind of self-indulgent distorted profit mills. Goldman Sachs, Merrill Lynch, Lehman Bros. and Co. devised ever complex profit schemes which had nothing to do with investing, and everything to do with high stakes gambling and scamming (ponzi is not the word).  Over the top leveraging ratios, shortselling constructs, derivatives...we all know these now as weapons and instruments of mass economic destruction...MOAFBs (mothers of all financial bombs).  Lehman's bombmakers deservedly met their demise.  Who is next?

 

Stop the madness, dismantle all these scams and get on with putting this country back to work and prosperity. And while you're at it, could you spare a brother a little integrity? 

 

 

Nov 2, 2011 7:58AM
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There is no way in hell that some of the salaries, perks, and benefits of some of America's top execs can even be justified.  All of my third quarter reports showed significant losses.  While American investors take losses, the execs are getting raises.

 

Stupid is as stupid does !!!

Nov 2, 2011 7:28AM
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I have continually invested in equities through mutual funds and individual stocks for over 25 years. I can see the fruits of my labor, but I suspect that the fruits could be more bountiful if the trading schemes Wall St. weren't geared to profiteering [limited to so few] at the expense of the rest of US.
Average Joe American says it quite succinctly, Wall St. functions, not for the common good (at the expense of US), but for its own excesses.

Somehow, regulation may be the only way to bring Wall St. back to its core. I certainly don't believe Washington has US in their best interest either, as our Govt. has grown to 800 lb. gorilla status and needs to keep feeding.

Elected officials [we have no leaders] had better open their eyes and ears to what is happening at the grass roots level in this country. The voice, for the people, by the people is getting louder and more focused.
The clock is ticking...
Nov 2, 2011 8:02AM
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I agree wall street needs to be more closely monitored, but it is the government which is filled with the wack jobs. Why is Barney Frank in charge of oversight for fannie and freddie? He alone is the single greatest culprit regarding our nations economy. By allowing the fed to give people loans who never should have gotten them, and then not alerting anyone to the impending disaster as the housing bubble burst, he should be in jail with Bernie. They should share a cell.

People need to wake up to reality. Making money is something we should all strive to do. But do it yourself. Don't stand in judgement and jealousy of those who have had success in any venue, wall street or otherwise. As long as it was done without harm to others.  Capitalism is how this country became the world leader it is. We have done more good and continue to do more good, worldwide, than is calculable.

Nov 2, 2011 7:55AM
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I think the other comments here sum up the average American's feelings about Wall Street nicely.  I'm not opposed to people working on Wall Street making a profit, but they appear to be reaping all the benefits while taking none of the risk.  I unfortunately got into the equities game late; I started investing about 10-12 years ago into IRAs/401Ks and I think I'm overall about 1% ahead of the game. 

Nov 2, 2011 8:51AM
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Who do you believe. Big gains, the biggest in years in one story, the next story is we expected this but didn't get it, we though this would happen, fooled again. Day after day it is the same old same old. U guess it is just who they are trying to convince.
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Oh believe me, the slow and steady listing of the USS America is not all Wallstreet's doing. A fair share of the blame lands back on the shoulders of Congress, The Treasury Dept, SEC, FED, and  _ _ _ (fill in the blanks for all your other favorite 3 letter gov't agencies). 

 

So yeah, we need to keep up the pressure and send a message to those who either fell asleep at the wheel, or conspired to derail our economy. Many big money double agents like former Treas Sec Paulson, and even Bernanke, allowed  the economic ship to enter the Devil's Triangle. Who knows if and when they can steer us out?

 

And If our current cast of "leaders" can't get the job done, vote them out, or can 'em!

Don't settle for anything less. Get involved at every level of government and vote. Yeah, I know... vote for who? Are you serious? Well, if the B team candidates don't cut it, let's take the bull by the horns and reform the whole election process!

 

We desperately need a resurgence in the Common Sense Party!

Nov 2, 2011 12:45AM
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Why? Because the heartless ceos and other rich who gets richer  doesn't know when they have enough and they get greedier when they have more than enough.? C'mon idiots pls understand I am tired explaining the nitty gritty craps.Sad
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