“This is a US decade,” said Richard Bernstein, founder, CEO and chief investment officer of Richard Bernstein Advisors. 
“From our perspective, the valuation of U.S. stocks versus emerging market stocks, is almost exactly, almost to the decimal point, flipped from where it was 10 or 11 years ago,” Bernstein said. 
“In fact, 10 years ago, free cash flow yields in the U.S. were at 2 percent, versus 7 to 8 percent for the emerging markets, Bernstein added. Today, these numbers are flipped, and U.S. stocks are as cheap as emerging market stocks were 10 years ago. He believes the opportunities in the U.S. are immensely better than they are around the world.” 
“It may end up being that we are the nicest house on a bad block, but that’s OK. That works.” 
Bernstein said emerging market countries are stuck between a rock and a hard place, deciding whether to fight inflation or unemployment. “These countries are also experiencing big credit bubbles. Brazil has decided to welcome inflation, with two quantitative easings in the last six weeks. Brazil has the third highest inflation rate in the world, and it’s time to be wary, he said. “My personal opinion is the Brazil we’ve known and loved for the past 10 years or so is something of the past.”
Meanwhile, India welcomed unemployment and decided to fight inflation, and the yield curve there is nearly inverted, the kiss of death for equity investors, Bernstein said. China has decided to fight both, but he said the credit bubble is much more pervasive there because the Chinese government has been so involved in so many levels of lending, he added. “If you didn’t like Fannie Mae and Freddie Mac’s role in the economy, then you can’t love China.”


Source: Registered Rep
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