Can the World Lift the US?

As the world’s largest economy for over more than half a century, the US has had a very strong influence on international markets: when the US fell other markets fell. In this crisis there has been talk of decoupling as initially some other markets held strong while the US tumbled. In the end though, most markets have been dragged down in some way or another by the US credit crunch.

Some may say that the decoupling theory still holds, as can be seen by earnings today. Companies that have done well like Intel [[intc]], have done so through foreign sales. Intel, the largest chipmaker, announced a better-than-expected profit and a sales increase of 9.3%, just as importantly it said that 79% of its sales came from Asia and Europe markets which have not been as hard hit as the US. This sent its stock rallying the most since January.

But perhaps it is not the decoupling theory at all, but the fact that strong economies abroad will help pull up the US economy rather than being dragged down by it. The big question is whether the money flowing into these US companies from abroad will actually make a difference to the US economy, or simply help other companies where manufacturing has been outsourced to. In any case it should help investors of these companies and possibly inspire confidence on the state of the global economy.

Posted in Categories: Eurozone, Stocks, USA.

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