Brad DeLong notes that the last sector to recover from a recession tends to be those who manufacture the equipment needed to produce durable goods.
One firm in particular–Applied Materials–is the preeminent manufacturer of the equipment needed to make high-tech capital goods. And so today investing in Applied Materials is, as the Financial Times writes, a clean and highly leveraged bet on the strength of America’s current anemic business-cycle recovery–a bet only for those with “iron nerves.”
While that firm has yet to see a jump in orders, it has seen a 50 percent jump in its stock since February, according to the Financial Times. Whether this is a sign of faith by savvy investors or mere speculation is unclear at this juncture, certainly to me.