`Money on the Move' From BRIC Stocks to U.S.: Chart of the Day

By Eric Martin

Aug. 13 (Bloomberg) -- U.S. stocks pulled ahead of Brazil, Russia, India and China this week for the first time in 2008, spurred by the Federal Reserve's efforts to cut borrowing costs even as the biggest developing countries are raising theirs.

The CHART OF THE DAY shows the S&P 500's 12 percent loss this year leaves it ahead of Brazil's Bovepsa Index, whose drop through last week had been the smallest of the five countries. The U.S. equity benchmark claimed the lead after banks rallied 22 percent and the steepest monthly retreat in commodity prices sent the Bovespa into a bear market.

``You have the money on the move,'' said Michael Shaoul, chief executive officer of Oscar Gruss & Son Inc., a New York- based brokerage. ``So many people had cut their allocations to the United States that there was nowhere else to go. It's like a fire in an empty theater. If there's no audience, you're not going to find a stampede to the exit.''

The Bombay Stock Exchange's Sensitive Index dropped 25 percent in 2008, China's CSI 300 Index decreased 54 percent and Russia's benchmark RTS Index fell 21 percent. Brazil's Bovespa has lost 15 percent this year.

In the U.S., where economic growth this year is projected to be less than a third of Brazil's 4.7 percent, the Federal Reserve reduced interest rates seven times to 2 percent in the past year. Brazil's central bank has raised its benchmark 1.75 percentage points to 13 percent, while India's climbed 1.25 percentage points to 9 percent and Russia's increased 1 percentage point to 11 percent.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.