No Safe Harbor?

Where do you want to invest today?

Europe? Good luck.

Europe has problems above and beyond Greece - the "green shoots" of recovery there were always scrawnier than over here, and the decision by the ECB to continue to accept Greek bonds as loan collateral means that institution's credibility is, at best, "stretched". With the possibility of banks in France, Germany, and Spain (and perhaps the UK, Italy, and the Netherlands to a lesser extent) are going to be severely hamstrung by troubles in Greece and Spain, growth in Europe could get pretty difficult. As we've learned over here, it's tough for the economy to be healthy if the bank sector is gangrenous.

The U.S.? Maybe.

I think the U.S. economy is in okay shape for now, but I'm one of the weirdos more worried about *deflation* than inflation (yes, I know public debt is onerous, I know government spending is out of control ... but I majored in Japanese back in college, and I've seen how this scenario can go). The market got over-heated and over-optimistic, but I think we at least have a credible hope to grow. For the next 12-18 months, we should be okay. The 3-year, 5-year, and 10-year horizons are scarier, though.

Emerging markets? Nope.

Brazil is raising rates. India is raising rates. China is trying to deflate a property bubble without strangling the economy. So, the three most interesting emerging markets are all trying to tap the brakes on their economies. Sometimes that works out, but more often than not that "tapping" on the brakes ends up sending the stock market temporarily into the windshield. So, now is a GREAT time to find Brazilian, Indian, and Chinese stock ideas, but I wouldn't be aggressively buying into the headwind of these governments trying to cool things down.

So, where does that leave us?
Gold? Not for me, thanks. Other commodities? Not looking so great ... some are looking strong on a short-term trade (coffee, corn, maybe cattle), but it's hard to feel great about copper sliding off (as that's often a precursor of economic conditions on a more global scale).

Bonds? Probably not, especially with the ratings agencies looking stupid (again), and rates seemingly on the rise.

It looks like we're in for one of those unpleasant periods where the predominant investment decisions are how to minimize the damage, as opposed to how to maximize the gains. But this too shall pass.

In the meantime, maybe I need to brush up on some more Turkish and Nordic stocks...