Morning tea: British portfolio managers' view of U.S. market

I had the pleasure this morning of participating on a conference call with five British portfolio managers. Not surprisingly, the discussion, over tea of course, was about the state of the U.S. stock market. Combined, these five gentlemen manage about $16 billion in U.S. stock funds. Once the crumpets were finished and before the second cup of tea was poured, we began the dissection of what's happening in the U.S. It's always good to have perspective from across the "Pond."

To the man, all five believe the U.S. is still a "bit on the cheap side" in terms of valuations. Consistent growth pockets exist, especially in the technology sector. The portfolio managers were enthused about Cisco Systems, Inc. (NASDAQ: CSCO), Apple Inc. ( NASDAQ: AAPL) (although Duncan was aggravated because his 6-year-old son dropped his iPod into the bathtub last night), Hewlett Packard (NYSE: HPQ) and Oracle Corp. (NASDAQ: ORCL). All four of these companies have a high degree of revenue and earnings momentum and of course, strong international sales.

When the subject turned to the U.S. financials, we had some differences. The differences had to do with timing and if there is more bad news to come. The five agreed with me that the big five American banks have a diverse enough stream of revenues and earnings so that any more mortgage issues that come up would be a minor hit to their earnings expectations. The big five are Bank of America (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC), Citigroup (NYSE: C), JP Morgan Chase (NYSE: JPM) and Washington Mutual (NYSE: WM). Three of the five felt that all are in a very secure earnings position, but possibly Washington Mutual could still see some "dodgier times." Two of the five portfolio managers felt that the general earnings expectations for the 3rd and 4th quarters could encounter a slight miss.