1. There's a lot of liquidity (read: free money) out there. In the fixed income parlance you either go long duration or long credit.
1a. If you want to go long credit there is no place to invest. 1b. If you want to go long duration, well... check your 10-yr rates.
Conclusion: banks will in early January rush to buy all the short term credit paper they are going to get, and probably some more treasury and that will give a signal as if credit is thawing when the case was just people drowning in liquidity.
2. In case you are thinking of carry trade, please note that you would need to have the growth in both income and productivity RIGHT here in the US. I know, you say China this and China that will grow but not gonna be enough by any stretch of imagination. (Hint: check the GDP sizes).
3. Low mortgage rates from Dec - Feb have helped TRAPPED the housing market further. How?
3a. Most who took the rates were refinancers - these made the case further given that about $5-10k equity was stripped in exchange for lower rates that the probability of moving is even lower after than before refinancing.
3b. The guys who didn't refinance have lost both the opportunity to do so (as the market marches back up) and proved they couldn't do so in the first place when they had the chance. In the parlance: they are burnt out 100%.
3c. The unlucky few picking up houses would find out that indeed affordability is a function of mortgage interest rate, and that does not mean very good for them after artificial treasury prices were lifted.
4. Remind yourself everyday that everybody else in the world will cut rates to zero. There is no currency for which you can hope to make money beyond speculative spurts.
5. Two large banks, currently viewed as a bullwark of the remaining financial industry, will collapse H2 2009 or H1 2010. Cause of death: drowning.
If you have 401k with no load fee either front or back end wait up for the international market to sell hard (like on Friday -4%) while the US was going solid green into the close (+3%).
Put 100% your nest egg in from cash to international growth stock, sure enough by 6 pm it's up, but only by 1-2%, depending on fund. You already nailed 3-4% arbitrage at this point. Then on Monday you get an additional session in which most of the SPX gain happens before 11am (30pts, we closed at 33pts) and add 3-4% more to the "arbitrage" gain we forecasted off friday.
The result is a 6-8% risk free. You only need $200-250k to make the ENTIRE of next year contribution and some change to boot.
Now turning to more serious topic and maybe, philosophy.
Roads add to supply. Adding roads don't add demand. Buildings add to oversupply. Building houses/malls/buildings don't add demand. Basic education adds to oversupply. Cheap labor is ALWAYS on the rise. Only specialized training gets you somewhere new.
Black dude doesn't get it.
Grab his money hand over fist. TC, AA, CX, BGC. Then run. In the mean time, watch the 61.8% Fib and 100% Fib of your favorite consumer and financials name. (If you can find the shorts, that is.)