The debt ceiling debate provided many lessons, including insights
into our future. While some believe we are witnessing the decline
of the United States as a global power, the truth of the matter
is we have never been stronger. Kick us when we are down at your
own peril. We love a good fight in this country, and we usually
This time the battle is on the home front, but the result will
be the same. Our work ethic, knowledge base and productivity will
allow us to solve the debt crisis while at the same time power
this economy forward. There is a reason demand for Treasuries is
still sky-high despite our challenges. The same cannot be said
overseas. As such, I would avoid these 11 foreign financial
): The London bank is cutting about 30,000 jobs in a global
restructuring. Is the London Bridge next to fall? Given the
problems with the euro, this foreign financial stock is to be
sold before things get worse.
China Life Insurance
): China is on an accelerated path of destruction. The U.S.
enjoyed 20 years of binging before collapse. With China, things
happen more quickly. The 10-year run is done, and a crash could
be coming next. I would avoid this Chinese financial stock.
): This Spanish financial company has been hit hard by the debt
crisis in Greece. With bordering country Portugal facing similar
problems, Santander will have trouble escaping the morass. Shares
have been descending in orderly fashion, allowing for a quick
exit today. Investors would be wise to take advantage of the calm
before the storm.
Royal Bank of Scotland
): What dangers lurk behind foreign financial stocks? The Federal
Reserve recently ordered Royal Bank of Scotland to improve its
U.S. operations oversight and risk management practices. That
sounds ominous and should give investors in this foreign
financial stock pause. What time bomb is ticking? I wouldn't want
to be around to find out.
): This Zurich-based financial stock could have more holes than
Swiss cheese. Troubles with the euro could have vast consequences
for countries such as Switzerland. Defending one's currency
typically ends badly. That one-way ticket down will bring UBS
): The German economy is a shining star in the cesspool that is
Europe today, but even the strong can get pulled lower when
things go bad. I would use relative strength in Deutsche Bank as
an opportunity to liquidate this foreign financial stock.
Lloyds Banking Group
): Despite heavy intervention from Her Majesty's government,
Lloyds Banking is to be avoided at all costs. Shares have lost
nearly half their value in the past year and now trade for well
below $5 per share. This foreign financial stock is now like a
): Reflecting the disarray in the Eurozone, Barclays announced on
Tuesday a 38% profit drop for the first half of 2011. Given the
poor performance, the British bank is slashing 2,000 jobs from
its rolls between now and the remainder of the year. With no
catalyst in site for a recovery, a yearlong slump in Barclays
shares is likely to continue.
): Add Credit Suisse to the list of European banks slashing jobs.
With U.S. stocks signaling a deceleration of global growth, the
cuts are likely to be the norm. These banks might look good from
a balance sheet perspective, but lending is anemic. Until there
is certainty with respect to the debt situation in Europe, Credit
Suisse is a foreign financial stock to avoid.
): The love affair with Brazil looks to be over for investors.
Bears have been selling Banco Santander since the end of 2010. A
sure sign this foreign financial stock is to be avoided can be
found in the current dividend yield of more than 8%. Such a high
payout can portend bad news for the company. I would sell first
and ask questions later.
Mizuho Financial Group
): Japan cannot seem to get a break. After a lost decade or more
of poor economic performance, the country is struck by an
earthquake that ground activity to a halt. Already on life
support, Mizuho Financial Group lost a third of its value. It
very well could be the death blow for this foreign financial
stock falling fast. Sell while you can.