The American Flu

Global_boursesContrary to what you may have heard on Bubblevision, U.S. markets
have been badly lagging the rest of the world’s bourses year-to-date.  As Jim Picerno’s
nearby table makes apparent, the rest of the world’s markets have badly
outpaced those in the U.S.

This should come as no surprise, as the rest
of the world’s economies have similarly outperformed the "Bush Boom."

Ironically, this leads to some unusual if belated realizations.

Sandra Ward, Barron’s emerging market’s columnist observes:

"Ten years ago this month, financial calamity of nearly unprecedented proportions in the post-war period crippled developing Asian economies, spread to emerging markets around the globe, derailed the U.S. economy temporarily and ended up toppling one of the highest-profile hedge funds of the time. The Asian flu, it was called.

Now, emerging markets could catch a bad case of the American flu." 
(emphasis added)

After this week, further evidence of this lag is showing up in all manners of ways.

Consider the Russell 2000 — the index of fast growth small cap stocks. IT IS NOW NEGATIVE YEAR TO DATE. This is especially significant, considering the Russell has been leading the Dow until about a year ago. (We noted the rotation here at the time).

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Sources:
Is the Bloom off Emerging Markets?
SANDRA WARD
Barron’s July 30, 2007
http://online.barrons.com/article/SB118558544243180961.html

Russell 2000 Falls 1.72%, Into the Red for 2007
ROB CURRAN
WSJ, July 28, 2007; Page B3
http://online.wsj.com/article/SB118558949064081052.html

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