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"The news out of Europe is encouraging," Lynch says. "It's too early to ring the
'all-clear' button, though." In a conference call with investors on Aug. 14, Cisco CEO John Chambers said that business across Europe, particularly Britain and Northern Europe, was showing "very positive progress." "We remain cautious, however, given the instability of the southern region," Chambers said. That compares with a more skeptical view last month from McDonald's CEO Donald Thomson, who said the European economy had not yet turned the corner. "I think the economists may be a bit ahead of themselves," Thomson said. "Some markets may have bottomed out. I would tell you some of the larger markets are still having some challenges." Liz Ann Sonders, chief investment strategist at Charles Schwab, says Europe looks attractive partly because the economy still has challenges. "The stock market is a leading indicator. It moves before the economic data catches up with it," Sonders says. March 2009, for example, was a good time to get into U.S. stocks, she says, even though things were "terrible economically." The market was at its recession low back then and stocks were cheap. The S&P 500 has climbed 146 percent since then, helped by a recovery in the employment and housing markets, and the Federal Reserve's stimulus program. This year alone, the index is up 17 percent. While Sonders believes investors should continue to focus on the U.S. stock market, Schwab has an "outperform" rating on European stocks. Still, it's probably too early for risk-averse investors to put money into Europe, says Alberto Gallo, head of European macro credit research for the Royal Bank of Scotland Group PLC. If people want to invest there, they should focus on corporate or high-yield bonds from the healthier eurozone countries such as Germany and France, Gallo says. "The large institutional investors are not coming back to the eurozone's (struggling) countries yet," Gallo say. "The interest has been mainly (from) hedge funds. The institutional investors still see parts of Europe as too risky."
[Associated Press; By KEN SWEET]
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