In view of the fact that the structure of the yield curve has historically proven, far and away, to be the most reliable of all economic forecasters, we are taking its bullish forecast for 2009 seriously. While the extreme front end of the curve remains inverted due to the FED's behind-the-curve approach, the rest of the curve is nicely upward-sloping. Once the FED bows to the inevitable, the curve should be in fine shape.
Consequently, we opt to leave any emotional baggage to the side. If the curve says the economy will grow in 2009, that is good enough for us.
