Surly Trader submits: Paul McCulley, portfolio manager at Pimco, made a rather astute comment that stuck with me, “You can only eat what’s in the cafeteria, and right now the cafeteria doesn’t have anything particularly appetizing in it.” That metaphor certainly rings true in today’s market. Many economists are predicting a very strong US GDP result for 4th quarter 2009, a statistic that is mostly attributable to massive government intervention and the restocking of inventories. The longer term question remains: will top-line sales provide earnings growth going forward rather than corporate cost cutting. In addition, we have highly respected economists such as Paul Krugman stating that a recession in the second half of 2010 after fiscal and monetary stimulus fade has a “30 to 40 percent chance”. These uncertainties, mixed with the fact that the government will be stopping its buying programs and will also be forced to term out its massive debt, will put upward pressure on interest rates. With this sort of backdrop, what do you invest in?
Bottom Choices:
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