Effect of European crisis on the US

11 Jun 2012 by Jim Fickett.

If the European crisis spreads as a crisis to the US, it will be via the banks. No one knows what the exposure of US banks really is to Europe, especially in the area of derivatives.

As far as the broader economy goes, however, the connections are wider than just the banks. Barry Ritholtz pointed today to an interesting tidbit at Factset, concerning the (considerable) exposure of large US companies to the economy in Europe:

Ten of the largest S&P 500 companies generated 23% of Q1 sales from Europe

In testimony before Congress yesterday, Chairman Ben Bernanke commented on the negative impact of conditions in Europe on the U.S. economy. In Q1 2012, ten of the largest 25 companies in the S&P 500 by market cap generated 23% of their revenues from Europe on average. It is interesting to note that seven of these ten companies are projected to report lower revenue growth in Q2 2012 than the S&P 500 as a whole (2.0%).