MorningWord9/6/13?

YesterdayintheChartoftheDay,Ihighlightedtheunder-performanceofhomebuildingstocksforthebetterpartofthisyear,andtheveryrecentlackofparticipationofhomeimprovementretailerHD?

ThelogicalconclusionisthatanimpendingfallTaperofbondpurchasesfromtheFed,whichhascausedafairlyhistoricriseinrateshasdramaticallysloweddownactivityrelatedtothehousingmarket?

Butthereisalsoanotherfactoratwork,forthebetterpartofthelastcoupleyears,whileEuropehasbeenmarredineconomicturmoil,andemergingmarketshavebeenindeeprecessions,U。

S。

companieswithoverwhelmingrevenueexposuretotheU。

S。

havebeenafavorableplacetoparkcashrelativetoU。

S。

multi-nationals?

Considerthiscomparison,HDwhichgetsnearly90%oftheirsalesfromtheU。

S。

isup130%sinceSeptof2011,vsIBMwhichgetsalittlemorethan40%ofitssales,andislikelytorelyonemergingmarketsandEuropeformuchofitsfuturegrowthisonlyup~14%inthatsametimeperiod。

WhiletheU。

S。

Fedhassignaledthatoureconomyisgettingclosertostandonitsowntwofeet,itisobviousthatthiswillbeaslowprocess,thusthetermTaper。

ButaswehaveseeninbondyieldssinceMay,themarketwillstarttoanticipatethenexttrade。

IthinkitissafetosaythatvaluationsinhousingrelatednamessuchasTOLandHDgotatadstretchedthisyear,withmultipleexpansionassumingtherecoverywouldgoonforyears?

Ontheflip-side,U。

S。

multi-nationalslikeIBM,(whichisexpectedtogrowearnings10%ayearforthenextfewyears,tradingat10xthatexpectedgrowth)whichhaveseverelylagged(down~4%ytd)couldofferagreatdealmorevalueonarelativebasisasopposedtothosesectorsthathavealreadybenefitedfromtheU。

S。

srecoveryandarenotlikelytoseeamaterialimpactfromtherestoftheworldcomingoffthemat。

Wearealwayslookingforthatnexttrade,whichoftentendstobeatadcontrarian。

WearecompilingalistofU。

S。

multinationalsthathavemissedthefortressAmericatrade,butcouldtakecenter-stage?

ifwedoseereflationofglobalgrowthinthemonths/quarterstocome。

ButTheTechnicalSetUpLooksDicey。

The5yearchart(below)showswhatisafairlyimportantinflectionpoint,earlierthisyearbreakingtheuptrendthathasbeeninplacesincethebottomin2008,andnowsittingononeandhalfyearsupport?

Onalongtermbasisthereisnorealmeaningfultechnicalsupportforanother10%lower。