×

A Tale of Two Economies

It was the best of times, it was the worst of times. How ironic that those words penned by Charles Dickens so long ago would be extremely poignant today!

Okay, so the reference is a little academic, but it really does hold true. From the look of the latest manufacturing numbers you’d think the economy was in pretty decent shape.

At first glance you see that the factory sector in New York State showed growth for the first time since April 2008. You’d be inclined to believe that manufacturers might lead the U.S. economy out of the worst downturn in 70 years.

But don't be fooled. Although manufacturing has shown strength its a small part of the economy. Meanwhile, most households are still struggling. In fact the very same manufacturing report referenced above shows New York factories continued to fire workers and reduce work hours, albeit at a slower pace than in July.

And to further emphasize the fragile state of the consumer, according to creditcards.com, the second quarter of 2009 closed with the highest consumer credit card and residential real estate loan delinquency and charge-off rates since the Federal Reserve began tracking data on the subjects.

Sounds bleak.

We know what happened in the Dickens novel, but in our Tale Of Two Economies, are investors about to get massacred?

For insights we turned to Doug Cliggott, Dover Management CIO. Here's how he recommends being positioned so you don't lose your shirt let alone your head. "I think you have to have a barbell strategy," he tells the desk.

BUYS:
Consumer Staples, Health Care, Electric Utilities, Agriculture, Engineering & Construction

SHORTS: Consumer Discretionary, Technology, Retail REITs, Regional Banks

“I think if we’re going to move in a big way it’s probably down, not up,” Cliggott says. "Although we have seen some improvement and manufacturing looks good, that's only a small part of the US economy. It's only 9% of employment.

"What has me concerned is that we've never come out of a recession with household debt levels this high relative to income."

Well, so much for a happy ending...



______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send your e-mail to fastmoney@cnbc.com.

Trader disclosure: On Aug. 18th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (HD) Sept. Call, Is Short (HD) Aug. Call; Najarian Owns (HPQ) Sept. Calls, Is Short (HPQ) Aug. Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (TRLG) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (BUCY) And Is Short (BUCY) Calls; Najarian Owns (INTC) And Is Short (INTC) Calls; Terranova Owns (AMZN), (STT), (MSFT), (KBHH); Terranova Owns (GOOG) Puts; Terranova Is Short (GOOG), (AVB); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Grasso Owns (ASTM), (BAC), (C), (COST), (PRST), (V), (WMT), (FAZ), (XLF)

NBC Universal Is The Parent Company Of CNBC

For Steve Grasso
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (MSFT)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (ROK)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (TMK)
Stuart Frankel And Its Partners Own (TRV)
Stuart Frankel And Its Partners Own (XOM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBC)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (SKT)
Virtus Investment Partners Owns More Than 1% Of (TNB)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Brian Stutland
Stutland Owns (MDAS)
Stutland Owns (BAC)
Stutland Owns (SPY)

For Rich Greenfield
Pali Capital Is A Market Maker In (NFLX), (CSTR), (NWS.A)

CNBC.com with wires