This column originally appeared on Real Money Pro at 8:04 a.m. EDT on June 27.
NEW YORK ( Real Money) -- Yesterday I got an email from a subscriber who asked me why I so frequently mention Ocwen Financial (OCN - Get Report) and Altisource Portfolio Solutions (ASPS - Get Report) in my posts.
Besides superior earnings prospects, an important reason is that both companies generate almost all of their sales in the U.S.
My friend/buddy/pal BTIG's Dan Greenhaus had a wonderful chart in his missive on Tuesday evening that highlighted the strength of company share prices that are domestic-based and are insulated from the sovereign debt crisis in Europe (compared to the S&P 500).
- Above all (and as cited above), our country's relative and absolute economic growth is superior to global growth. The U.S. economy, though sluggish in recovery relative to past expansions, is superior to most of the world's economies (with the exception of some emerging markets) in terms of diversity of end markets, quality of global franchises, management expertise, operating execution and financial foundations.
- U.S. banks are well-capitalized, liquid and deposit-funded. Domestic financial institutions are far better off than the rest of the world in terms of liquidity and capital. Our largest financial institutions raised capital in 2008-2009, a full three years ahead of the rest of the world - while the badly capital impaired EU banking industry continues to delay capital raises. Importantly, our banking system is deposit funded, while Europe's banking system is wholesale funded (and, thus, far more dependent on confidence).
- U.S. corporations boast strong balance sheets and healthy margins and profits. Our corporations are better positioned than those in the rest of the world. Through aggressive cost-cutting, productivity gains, external acquisitions, (internal) capital expenditures and the absence of a reliance on debt markets -- most have opportunistically rolled over their higher-cost debt -- U.S. corporations are rock solid operationally and financially. Even throughout the 2008-2009 recession, most solidified their global franchises that serve increasingly diverse end markets and geographies.
- The U.S. consumer is more liquid and stable. An aggressive Federal Reserve (through its extended time frame of zero-interest-rate policy) has resulted in a U.S consumer who has re-liquefied more than individuals who live in most of the other areas in the world. (Debt service and household debt are down dramatically relative to income and back close to historic averages.)
- The U.S. is politically stable. After watching regime after regime fall in Europe in the last year (and given the instability of other rulers throughout the Middle East), it should be clear that the U.S. is more secure politically and from a defense standpoint than most other regions of the world. Our democracy, despite all its inadequacies, has resulted in civil discourse, relatively balanced legislation, smooth political regime changes and the most stable rule of law (that has contributed to social stability, a relatively limited amount of outright corruption and a sense of overall order).
- The U.S. has a solid and transparent corporate reporting system. Our regulatory and reporting standards are among the strongest in the world. Compare, for example, the opaque reporting and absence of regulatory oversight in China vs. the U.S. (It is beyond compare.)
- The U.S. is rich in resources.
- The U.S. has a functioning and forward-looking central bank that is aggressive in policy (when necessary!) and capable of acting responsibly during crisis.
- The U.S. dollar is (still) the world's reserve currency and is far more solid than the euro and many other currencies.
- The U.S. is a magnet for immigrants seeking a better life. This and other factors have contributed to a better demographic profile in our country that has led to consistent population growth and formation of households. (Demographic trends in the U.S. are particularly more favorable for growth than those population trends in the Far East.)
Select the service that is right for you!COMPARE ALL SERVICES
Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV