>GLOBAL EQUITY STRATEGY: BETTER THAN BONDS

■ The Growing Wall of Worry — Uncertainty about European fiscal positions, a surprising ban on short selling, stresses in the interbank market and Korean political tensions have helped drive global equities down 16% from April highs.

■ No Discrimination — All major regions are down a similar amount. Global equity market correlations are at their highest level in 30 years. Put / call ratios are back at extremes. Investors are not discriminating what they sell, they just sell.

■ Flight to Safety — German government bond yields are at their lowest level in 90 years. Global forward PE ratios are approaching single digits. Perhaps most dramatically, European dividend yields are back above government bond yields. This extreme valuation event last occurred back around global market lows in 2003 and 2008.

■ Opportunities for the Brave— We look for stocks around the world where this equity/bond yield crossover has occurred, dividends are forecast to grow and earnings momentum remains solid. They include ABB, BAE Systems, BASF, CEZ, China Mobile, Cielo, Honda, Insurance Australia Group, Johnson & Johnson, Mattel and Vodafone.

To read the full report: EQUITY STRATEGY