Business Cycle...Where are we today?

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chippp

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What's everyone's take on the current market?
What are the "must-buys" sectors?

Earlier last month all the signs were towards a slowdown but it seems like we're picking up pretty strong...financial institutions scoring well despite higher rates, commodities all going in 1 direction... if you were to construct a 3 year investment horizon portfolio with medium-high risk appetite, what would it be?
 
I am...but we have such a talented pool of intellectual resources here it's a crime not to ask.
 
I wouldn't be too optimistic given the economic fundamentals going forward. Leading indicators are sluggish (besides manufacturing which has been surprisingly good); the new jobs numbers were well below consensus; the labor market is starting to feel tight and businesses are starting to feel wage inflation pressures.....and the list goes on.

Anyone think Bernanke overshot or is inflation still a legit concern going forward?
 
WSJ made some interesting remarks today:

The Federal Funds Rate is approaching the rate of GDP growth. After the last FOMC meeting, the FFR budged upwards to 5.25%, while GDP stayed idle at 5.6% growth for the trailing four years.

What's this mean? The cost of borrowing is beginning to reach the same pace as the aggregate growth (returns) on the market economy. At some point, firms will need to be more conservative with their capital allocation decisions, particularly when looking into expanding in low risk, low beta projects (with low expected returns).

Potential Moral of the story: This is a useful indicator that an economic slowdown may be on the horizon.

For the full report, read "Ahead of the Tape" in the Money & Investing section, by Justin Lahart.
 
Humm...what do I like going forward

I think intermodal transportation i.e, rail, is low hanging fruit right now although not a glamorous sector. The insurance costs for truckers has gone through the roof and there is a report out that there will be a shortage of about 120,000 CDL drivers nationwide by 2010-11. Supply Chains are getting thinner and longer and that has put a lot of pressure on rates. Throw in Fuel Prices, Fuel Surcharge is about 18% add-on to shipping costs (nonvalue added) and I think you will see rail stage a greater comeback/revival. You can ship an entire 40 foot container or 53 footer by rail cross country at a fraction of what it would cost for over the road. So take look at GBX and RAIL (gotta love Icahn)

One sector that has been out of favor since the beginning of the year is anything RFID...take a look at the financials on IN and ZBRA...I would let them settle out a little and wait til the end of the year to decide on making a move there. Keep it on the radar.

I think titanium stocks have (almost) taken enough of beating...way too much pricing power and long term contracts in that market...TIE see if it holds 27 and change if not then 25 is the next stop...ATI is another solid player chart is in no man's land right now but will move in stride (somewhat) with TIE. You could play the options on them and make some pretty good coin.
 
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