The Grand Rotation

As many of the USA high flyer's begin to absorb their too high valuations....attention appears to be spreading outside the USA for value and growth. This tape smells of inflation....only equity benefits...not cash or bonds.

The ROW (rest of world) is the most under invested asset class today....both equity and debt.

The American equity markets are over bought.....but not yet too expensive.
Gold is challenging the bears....the theme of lower energy prices has not played out with very high drilling costs here in America. Coal will soon catch a bid and demand might exceed supply.....despite the climate change folks.

The USA/ and European super blue chip companies continue to rule the world. An example would be in China there are 100 domestic car companies. Yet they only control 30% of the market...and are having a hard time exporting any vehicles....the rest are of course GM, BMW and MBZ.
An estimated 75% of the top exporting firms from China are foreign....not Chinese.

So...unsurprising....40% of the world's household net worth is in America....and controls most of those global companies....as shareholders.

The stock market continues to shrink...the number of public companies is now 44% below the 1997 peak. Additionally an estimated 75% of invested assets are now held under custody (wrap fees) of various money managers....etf's and the like....hedge funds control $2.6 trillion in assets.....2.6% of all bonds and stocks globally.

The average US Per Capita Income/ salary of a federal employee is now $78,467....a person in the private sector just $42,693......has the media ever reported this?

A fun comparison to just how big many USA companies are now..

-) Nike is bigger than Poland's stock market.
-) IBM is bigger than Mexico's stock market
-) Google is bigger than Brazil's
-) GE is bigger than South Africa's
-) Face book is bigger than Malaysia's
-) Wells Fargo is bigger than India's!
-) Proctor and Gamble is bigger than Russia's
-) Disney is bigger than Ukraine's

Google has a market cap that is 50% greater than GE with only 46,000 employees vs. GE with 305,000...amazing!

In 2013 the federal government spent 55% more money than it did in 1999.
And yes the economy only grew a total of 30%.

With all this math....the problem remains.....that national government debt continues to grow annually at over 8% ...this remains unsustainable...smart people know this....this is why they are not hiring or spending money on growing their business...any more than they have to.

And finally it should be no surprise the worst performing stock market in the world year to date......is Russia ...down 14%....probably the only thing that makes sense today.

Danny Boy seen here watching the fish swim by.