(Bloomberg) -- Investors should sell continental European stocks and buy U.S. shares because interest rates and labor costs are likely to rise in Europe, according to Lehman Brothers Holdings Inc. strategist Ian Scott.
In a note to investors today, London-based Scott cut his recommendation on continental European stocks to ``underweight'' from ``overweight.'' He took the inverse strategy for U.S. shares.
``Earnings revisions strongly favor U.S. stocks,'' which by some measures ``appear rather more cheaply priced, relative to continental Europe than has been the case for several years,'' the note said.
European Central Bank President Jean-Claude Trichet said June 5 that officials may raise interest rates next month to combat the fastest inflation in 16 years.
The Dow Jones Euro Stoxx 50 Index, a benchmark for the euro zone, has dropped 18 percent this year as of 11:07 a.m. in London. That compares with an 8 percent decline for the Dow Jones Industrial Average in the U.S.
In a note to investors today, London-based Scott cut his recommendation on continental European stocks to ``underweight'' from ``overweight.'' He took the inverse strategy for U.S. shares.
``Earnings revisions strongly favor U.S. stocks,'' which by some measures ``appear rather more cheaply priced, relative to continental Europe than has been the case for several years,'' the note said.
European Central Bank President Jean-Claude Trichet said June 5 that officials may raise interest rates next month to combat the fastest inflation in 16 years.
The Dow Jones Euro Stoxx 50 Index, a benchmark for the euro zone, has dropped 18 percent this year as of 11:07 a.m. in London. That compares with an 8 percent decline for the Dow Jones Industrial Average in the U.S.
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