To hedge against the myriad headwinds facing companies, some strategists suggest being selective about regional exposures heading into the earnings season.
“The weakness in FedEx earnings is centered in Asia and Europe, where indeed we are seeing the biggest economic challenges, while US activity is reasonably strong,” said Marija Veitmane, a senior strategist at State Street Global Markets. “This fits with our broader assessment of the macro conditions at the moment. Indeed, the US is our favorite market.”
Goldman Sachs Group Inc. strategists agree, saying US firms that do most of their business at home will fare better than those exposed to Europe, where a recession is all but guaranteed. In dollar terms, the Stoxx Europe 600 has lagged the S&P 500 this year, while a Goldman basket of US firms with 100% domestic sales has outperformed one tracking those with high exposure to Europe.
--With assistance from Michael Msika.
This article was provided by Bloomberg News.