Dr. Achuthan of the Economic Cycle Research Institute was on CNBC today with a must-watch interview. If you only have a minute, start at around the 7 minute mark. Basically his view is that we may well not be in a long expansion; he talks about a growth slowdown perhaps in the second half of 2010 and is not bubbly about 2011-2. This supports the views stated over and over here. You want to own assets that will be around after another economic downturn and that can grow assuming the economy grows in the quarters ahead. An asset such as a Ginnie Mae that pays back not only interest but principal may be a Good Thing.
Note that the website lets one see ECRI's shorter-to-medium term leading indicators. Reserved for paying customers are the long leading indicators. My suspicion based on the above comments is that they have weakened a bit. From an investment standpoint, the deep cyclicals such as Caterpillar may be overvalued and technically overextended. Dr. Achuthan does offer some specific caution for developing countries with an export-driven economy.
From his discussion, it does not appear as though there is likely to be a lot of pricing pressure. In other words, the government and Fed may "print" money (generally electronic), but since most of what we call money-printing is really debt issuance via bills/notes/bonds rather than actual currency creation that gets spent, the effects on price increase turn out to be much more unpredictable than a Zimbabwe scenario. This view fits with that of David Kotok of Cumberland Advisors (who has had a hot hand this year), who was on CNBC yesterday and offered the view that Treasury rates are probably near their upper limit for some period of time (though he prefers "spread" products over direct government debt ownership).
The nearly 3-decade old bull market in Treasuries may, amazingly, not have died yet.
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