No Rush for Fallout Shelters

05/28/2009 9:22 am EST

Focus: GLOBAL

Igor Greenwald

Chief Investment Strategist, MLP Profits

This is surely not what North Korea had in mind. The Hermit Kingdom's Memorial Day nuclear test was meant to shock and awe imperialist dogs. The message was punctuated by short-range missile launches. Seoul stocks, menaced by a belligerent neighbor within artillery range, quickly found themselves in a hole.

The rest of the world yawned and instructed diplomats to draft a reprimand. And then came news that consumers in America have grown somewhat less morose. This set off a very different and incomparably more powerful chain reaction. Indian stocks rose 4% and Hong Kong added 5%. Only South Korea continued to mope.

The power of the American purse, even in its current squeezed state, transformed a nuclear test by an outlaw regime into instant trivia, just another firecracker going off in a distant mine. What's a hard-up dictator to do? Plutonium is a finite resource, much more so than abundant American optimism, which is much cheaper to mine.

And it's not as if the US holds a monopoly on cheer. Confidence is up in Taiwan and in South Korea, and it's probably safe to return suspenders, shoelaces, and razor blades to the citizenry of France and Germany, where things have at least stopped getting worse, and not a moment too soon.

As of this writing, the German government was still working to rescue Opel from the wreckage of the looming General Motors (NYSE: GM) bankruptcy, reportedly favoring a bid for GM's European arm by Canada's Magna International (NYSE: MGA) and its Russian backers over competing offers from Fiat, private European investors, and a Chinese firm. Meanwhile, Porsche (XETRA: PAH3.DE) resorted to a loan from Volkswagen (XETRA: VOW.DE) to propel its stalled bid for the larger automaker. Hedge-fund bears have been eyeing lofty VW shares as possibly the last free lunch in town.

It's certainly been a lean spring for the naysayers, their logic swamped by the cheap credit floating most boats. Asian markets have been the envy of the fleet, buoyed by big government stimulus plans and hopes that exports have hit bottom.

Fund manager Edmund Harriss of Guinness Atkinson says the coming wave of spending hasn't yet been priced into the East Asian shares, despite the strong recent gains. He favors China stocks, especially those geared to domestic consumption, over export-reliant Taiwan and Korea.

And just in case it's finally time to play some defense, the week's investing ideas lean that way. John Snowden of The IRS Report highlights Hilton Food Group (LSE: HFG.L), a geographically diversified meatpacker with a solid dividend and insiders who've been buying shares. Nick Lanyi of High-Yield International recommends the Calamos Global Total Return (NYSE: CGO), a closed-end fund that hedges its diverse equity holdings with an income stream derived from corporate debt. These are conservative picks, to be sure, on the assumption that all tides eventually turn.

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