After their strongest week in four years, U.S. markets have been in a downbeat mood so far this week. The combination of softer consumer confidence and a warning about lower profits than expected from Lennar, the third-biggest U.S. homebuilder, have aggravated worries about the U.S. economy.
In contrast, optimism was the buzz word in Europe. German business confidence has bounced back to approach an historic high this month, shrugging off fears of a U.S. economic slowdown and the prospect of higher eurozone interest rates. The Munich-based IFO institute’s business climate index rose in March, suggesting that Europe’s largest economy is on track for another impressive growth spurt this year. French business confidence also rose unexpectedly in March to the highest level in almost a year, according to a survey earlier this week.
European optimism is reflected in the price performance of Global Stock Investor‘s European holdings, with the Swedish ETF (EWD) up 3.65%, and April’s featured pick Tesco (TSCDY) up 1.55%. Overall, three of our six positions are in the black, with U.S.-based Indian outsourcing play Cognizant Technologies (CTSH) also showing a profit.
SWEDISH ETF (EWD)
Sweden’s privatization drive — one of the cornerstones of Swedish Prime Minister Reinfeldt’s new administration — is well under way. The government owns a portfolio of 55 companies worth $93 billion and has just drawn up the first list of six companies that either will be sold in their entirety or in which the state’s stakes will be reduced. The six companies to be sold are: V&S, a leading beverage company; TeliaSonera, the telecommunications operator; Nordea, the bank, SBAB, a mortgage lender; Vasakronan, a commercial property company; and OMX, the Nordic stock market and trading technology company.
Last week, U.K. Chancellor Gordon Brown announced that he would cut the mainstream corporation tax to 28% from 30% in April 2008. That will make the rate of corporate taxation in the U.K. lower than in the U.S., Germany, France and Japan. It should also help to boost earnings at U.K.-based Tesco.
COGNIZANT TECHNOLOGIES (CTSH)
Teaneck, N.J.-based Cognizant Technologies has gathered yet another award. In The Forrester Wave: North American Applications Outsourcing Q1 2007, Cognizant was cited as the top offshore provider for North American applications outsourcing. The rankings represent Forrester’s selection of the top performers from each of the major categories that make up the North American Applications Outsourcing Providers — multinational corporations and offshore players. Cognizant stood out because of its cultural affinity with U.S. clients. Top companies in each sector were chosen based on current offerings (technical, engagement and functional approach; client references; and complementary capabilities), strategy (solution and corporate) and market presence (based on customer base, financial performance and engagement profile).
THIS DAY IN HISTORY
The NASDAQ Composite peaked on March 10, 2000, at 5,048.62, but the NASDAQ 100 — and its ETF (QQQQ) — reached its peak seven years ago yesterday, March 27, 2000, at 4,704.73. Dominated by "five horsemen" Microsoft, Intel, Cisco, Dell, and Oracle, the NASDAQ 100 is down 61.7% over those seven years.
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