The last few days—more specifically Thursday October 6 and Friday October 7—have shown investors how markets are likely to work in at least the first half of 2012.

You do need to apply a little stock market history to flesh out the past few days and turn it into a road map for the next nine months or so, but I think the outlines are there.

I’ve written recently about the likelihood that sometime in 2012 the emerging stock markets of China, Brazil and the rest of the gang—dragging the commodity economies of Australia, Canada and the rest of that global group with them—will decouple from the slow growth developed economies. At some time around the middle of 2012 it will become clear enough to investors that China, to take the core case, isn’t headed for a hard landing, and that growth of 8.2% to 8.5% is indeed the likely bottom for this cycle that global cash flows will move toward economies showing that kind of growth and out of developed stock markets where growth is stuck near 1% to 2%. At that point emerging stock markets will reverse the underperformance of November 2010 to now and begin to outperform their developed country counterparts.

But what about the long nine months or so (and maybe longer) until that certainty and outperformance arrive? What happens then?

This is where the action of the last few days and the lessons of stock market history can suggest the likely details. Read more

Find me some growth! Please! Anywhere in the world.

Europe isn’t growing—the weaker economies are all locked into austerity budget cuts. The U.S. isn’t growing—unless you call 1.3% annual growth in the second quarter growth—and the budget cuts in the debt ceiling deal sure aren’t going to accelerate this economy. India is slowing. Brazil is slowing. Even China may be slowing.

So is it any wonder that the stock market is in a deep, deep funk. (Maybe we should call a 512-point drop on the Dow Jones Industrial Average something more than a funk, huh?) Sure stocks are reasonably priced or even cheap by historical standards—but that assumes something like normal economic growth. Do you see it? Anywhere?

And let’s be very clear on this: Without some growth there’s zero chance that the deeply indebted developed economies are going to dig their way out of debt. Or that stock markets will regain their legs and reverse the 10% drop of the last nine days.

What’s an investor to do? Well, as my contribution I’m going to give you 10 stocks that I think can still give you some earnings and revenue growth even in this slow global economy.

But let’s start with a quick survey of the growth—or lack thereof—landscape. Read more

Politics virtually guarantee that the global economy won’t go into crisis in 2011. Politics make it extremely unlikely that the global economy will slow down as much as the market seems to fear right now. Politics, in fact, put a safety net under the global economy.

This year.

And politics also virtually guarantee another, deeper crisis in 2012 or 2013. I’d bet 2013.

How come? You see just about every politician in the world is trying to kick an economic problem down the road into 2012 or 2013. I think they’ll succeed in 2011 in postponing the day of reckoning using a combination of funny accounting, additional spending, and subsidies. But the price for that postponement will be that problems put off in 2011 will be bigger and harder to truly solve in 2012 or 2013. And that will raise the odds that the the global economy will face a serious crisis again—just five years or so after the last one.

This kick it down the road effort is most obvious in the EuroZone where the effort to put together a new rescue package for Greece really comes down to putting off a Greek default from 2012 to 2013 or 2014. But the effect is also visible in the United States where I think the most likely result of negotiations to raise the debt ceiling will be to kick the problem into the 2012 election campaign with a “solution” postponed to 2013. And in China where the new leadership that takes over in 2012 and 2013 from current President Hu Jintao in 2012 as party leader and in 2013 as president will be extremely reluctant to rock the boat until it’s sitting firmly in the seats of power.

Altogether this politics of delay means that in 2011 the global economy will get enough stimulus to keep growth at the relatively high levels that politicians need to keep folks reasonably happy and that we won’t see politicians even thinking about making the tough choices that might inhibit growth until well into 2012. Read more

Want to see who’s building the most valuable brands in the world? Start with this list

The annual BrandZ 100 list of the most valuable brands in the world is out. The big continuing story in this year’s list is the increase in the number of top brands coming from the world’s developing economies. This year’s list has 19 brands from Brazil, Russia, India, China, and Mexico.

If you’re interested in what emerging market companies are grabbing global mind share, this list from Millward Brown Optimor is a great place to start. (And if you live in a developed economy, it’s as good way to check your perceptions of the way the world is going.)

The ranking is based on calculations of the value of a brand that try to link customer perceptions of a brand with company revenue, earnings, and shareholder value. The list focuses on brands that generate revenue and earnings through the sale of goods and services. It’s not a list of what brands have the biggest following on Wall Street and it excludes corporate brands that aren’t linked to particular products. (So Coca-Cola (KO) gets big brand credit for Coke but much less for brands such as Fanta, to take one example.)

So what brands show up on the list that are of interest to investors in my opinion? Read more

A little ol’ downgrade to a negative outlook of the U.S. credit rating from Standard & Poor’s yesterday, April 18, was enough to throw the financial markets into a tizzy.

What happens in June when the U.S. Federal Reserve stops buying $100 billion in U.S. Treasury notes every month as part of the program of quantitative easing know as QE2?

You’ve heard the wails of worry. Which buyers, if any, will pick up the slack when the Fed exits this market? At the least U.S. interest rates will have to rise to attract those additional buyers. At the worst, a lack of buyers will tip over the entire tower of cards that is U.S. government finances.

And I’m starting to hear another still-building cacophony of worry. The Fed’s most recent program of bond buying will have put $600 billion into the U.S. money supply by the time it’s over in June. A significant portion of that hasn’t stayed in the United States. Instead some of that money has gone overseas seeking better returns in Brazil and China and Turkey and Indonesia than it can get in any domestic U.S. market.

What will happen, the emerging worry goes, when this hot money starts to flow out of the financial markets in Brazil and China and Turkey and Indonesia? Won’t the flight of this hot money create another global financial crisis akin to the Asian currency crisis of 1997 that brought the world to the brink of a financial meltdown?

The key thing that both these scenarios have in common is that they envision a big blow up. Things will go wrong quickly and big time.

Actually, I think, the most likely scenarios have less in common with the Hindenburg disaster than with the slow leak from an inflatable plastic model of the globe. In other words, the end of QE2 will bring not a bang disaster but a whimper of pain—but investors still near to pay attention.

Let me look at each of the two big worries to see how much sleep you should be losing.

First, the Who will buy our Treasuries? worry. Read more