Interview With an Equity Strategist

I recently had the opportunity to chat with Sean Darby, global head of equity strategy at Jefferies Group (JEF), following a presentation he gave to a group of hedge fund investors in Manhattan. Darby is a sharp strategist who spends most of his time in Hong Kong. Before joining Jefferies, he was Institutional Investor's second-ranked Asian strategist while plying his trade at Nomura.

At the beginning of the year, Darby forecast a positive double-digit return for the S&P 500 and stated that U.S. equities would be the top-performing financial asset class in 2012. In short, he has been bullish -- and correct. The thrust of his argument is that the U.S. economy has been exporting inflation to emerging economies while undertaking the arduous task of lowering domestic production-cost structure. When the effects of a multiyear decline in the U.S. dollar is combined with the dual impact of negative wage growth in the U.S. and double-digit wage inflation overseas, our economy has stealthily become highly competitive in the global markets -- even in manufacturing. Darby presented extensive quantitative evidence to support his thesis. Although my view is that this remains a work in progress, Darby is of the mind that the heavy lifting is already over and the dividends are already beginning to accrue....650 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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