Tuesday, March 23, 2010

Morgan Stanley (NYSE:MS), US Steel (NYSE:X), European Sovereign Debt Crisis

US Steel has large exposure to European sovereign debt crisis

There are a number of companies based in the United States which have a strong presence in Europe, making them extremely vulnerable to the emerging sovereign debt crisis which isn't limited to Greece. One of those is US Steel Corporation (NYSE:X) which generates 27 percent of their revenue from the European nations.

It does make me wonder if Morgan Stanley (NYSE:MS) analyst Mark Liinamaa thought of that when he raised his target on US Steel from $58 to $62.

Of course the increased prices this year will help the company, and there is no way of knowing how quickly or deeply a sovereign default would affect a company, as it would depend on the country and the ability and will of other European nations to respond.

Looking at the fiasco of Greece, not just with their fiscal irresponsibility, but the wary response of the rest of Europe toward helping them out, you have to wonder what would happen if it was Spain or a much larger country like them about to default on their debt.

While there is no reason to panic, it should cause everyone to check their stock portfolio to see if the companies in them are highly exposed to Europe. You may be surprised at what you find.

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