With investors taking a breather nowadays from the recent stock market rout, some unexpected good news for the U.S. market came from all places, Europe. News that Swiss banking giant Credit Suisse put an overweight on U.S. stocks — the first duration that decade — is certainly a surprise from those of us who have worked with European banks and know just how Euro-centric they really are.

The Credit Suisse analysts pointed out the U.S. Federal Reserve is one of the only central banks with a clear growth mandate.

“Thus, we believe that the Fed will continue to be more balanced in its assessment of inflation risks,” the strategists said, adding that labor-cost inflation and corporate-sector pricing trends both propose underlying inflationary pressures are well restricted.

In lowering their weighting on Europe, one of the reasons

the analysts gave was that the U.S. is nearly bottoming out in slower profitable growth and we should start seeing a pickup in the next few months, whereas Europe is only starting to go through the slower growth process.

I have been cautioning clients to lighten up on European exposure, as I plus think that the same ills that have dogged the U.S. market since summer are about to dog our friends on the other side of the Atlantic.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no positions in any stock mentioned as of 1/14/08.

Original post by Aaron Katsman

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