Tags: Insana | global | Japan | US

Ron Insana: Global Economic Weakness Makes US Equities a Smart Choice

By    |   Wednesday, 19 November 2014 12:49 PM

Many economies overseas are in big trouble, and that makes U.S. stocks an attractive investment alternative, says CNBC contributor Ron Insana.

"The U.S. still has many problems to deal with, but most of the threats to sustained economic growth are coming from our intransigent neighbors," he writes in a commentary for CNBC.

Japan's economy has contracted for two quarters in a row, shrinking 1.6 percent annualized in the third quarter. And eurozone GDP grew only 0.2 percent in the third quarter from the second.

"No longer is the U.S. simply the best house in a bad neighborhood, it's about the only house worth living in, at the moment," Insana notes.

"Lacking a full-scale and coordinated effort to fight recession and deflation among our global counterparts, the U.S. is at risk of watching its own house go to pot as the rest of the neighborhood fails to keep up with the Joneses."

And what does this mean for investors?

"Interest rates stay lower for longer in the U.S., rising not at all in 2015," Insana writes. "Given the seasonal, cyclical and fundamental positives for stocks, it also underscores the notion that investing in domestic equities will be a good plan for 2015."

The pressure for stimulus in Japan and Europe also argues for exchange-traded fund exposure to German and/or Japanese stocks, he says.

"I still like our house best, though I am taking small steps toward other parts of the neighborhood," Insana quips. "But my neighborhood watch is on and at the first sign of additional trouble elsewhere, I would be running very quickly back home."

The S&P 500 index and the Dow Jones Industrial Average hit record highs once again this week, but some experts still question the market's strength.

There has been "decreased volume and volatility on this rally," Tom Wright, director of equities at JMP Securities, tells The Wall Street Journal. That "indicates that people aren't quite as enthusiastic about this rally as we'd like to see."

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Many economies overseas are in big trouble, and that makes U.S. stocks an attractive investment alternative, says CNBC contributor Ron Insana.
Insana, global, Japan, US
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2014-49-19
Wednesday, 19 November 2014 12:49 PM
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