The Recession Goons take another beating...

[PaceAdvantage]

ISM index released today better than expected (48.6 vs 47.5 consensus), and way above the historical "recession" level of around 44....

Market rallies almost 400 points...

As noted earlier, existing home sales were up month over month....

GDP is STILL positive....not a single quarter of negative growth DESPITE all this doom and gloom talk of recession (with some predicting a DEPRESSION)!

Let me know when that recession gets here....I'm still waiting....

[riskman]

The economic data continues to show an anemic economy, which remains unable to steady its wobbly legs.

Existing home sales have increased, but new-home sales are down and home prices continue to fall.


Orders for durable goods fell in the most recent report.


Consumer confidence is in the cellar and consumer sentiment also continues to decline.
But the big news was that GDP numbers for the fourth quarter of 2007 showed an abrupt slowdown.

The definition of a recession is two consecutive quarters of negative GDP growth. We cannot call this slowdown a recession yet, but the numbers look bad enough to surmise America is near one.

So how is an investor to respond? What is the prudent course when faced with a probable recession?

Are We Really at the Bottom?

[lamboguy]

why don't we just say a recession is really not a recession, because the rules change all the time. people are losing jobs and blowing their homes. gas prices have tripled, financial institutions are on the brink of insolvency. but all that stuff don't mean nothing. maybe!


one thing i do know, the dollar has gone down from 126 to 72 and heading to 52. gold has gone from $258 to $1000. so maybe you can spin us in or out of a recession, but you can't spin the math. and that math tells it all!!

[ddog]

Pa,

Your are a funny guy.

Not better than my consensus forecast though!

We had forecast your post to be worthy of two belly laughs but it only received one.

[russowen77]

Dude,

There is no about one around here. The economy flat out sucks.

[riskman]

And then we have these fat cats on Wall Street giving us the finger.

You have heard about the severance pay package for Stan O'Neal of Merrill Lynch: over $160 million. In the fourth quarter of 2007, Merrill lost $14 billion. Then there was Charles Prince of Citigroup. He departed in November with $94 million in stock holdings. Citigroup lost close to $10 billion in the fourth quarter.

What is the lesson for investors here? This: big losers win big. Big winners win bigger.
What is the lesson for decision-makers in high places? "Go for broke." The government or some bigger fish will bail out your mistakes if the mistakes are big enough. You will keep your pension. You may even keep your severance pay, if the contract is in writing.

In a highly leveraged (debt-driven) economy that operates in terms of the assumption of "too big to fail," you can fail big and still win big. Your negative sanction – getting fired – is more profitable than the most positive of sanctions facing 99.99% of all corporate decision-makers.

This is the social price of government-protected enterprise. The more leveraged it is, the more profitable for those at the top, who make the decisions.

Is there something wrong with this picture?

[PaceAdvantage]

Originally Posted by lamboguy

why don't we just say a recession is really not a recession, because the rules change all the time.

No, the rules don't change...that's what I'm saying. Not even one quarter of negative GDP growth, let alone two...that's one of the steadfast rules.

[sammy the sage]

Rule's of the past also stated you:

You must win time of possession to win football games...that all changed in the mid-80's.

Thought I would keep the analogy simple... ...for those WHO ARE STUCK IN THE PAST... ...or are just PLAIN SIMPLE-MINDED!

Your resident goon, doom, gloom, and what-ever else name you wish to spout...

[traveler]

PA - I hope you are just stirring the pot otherwise you are as clueless as Washington. While the classical definition of a recession hasn't changed, we are certainly flirting with one.
Because early speed is still important, do you ignore 5 off the pace winners and bet the speed?
Washington ignores headline inflation which includes energy and food prices - why? - sure keeps the masses in the dark and keeps down their c.o.l.a adjustments down for SS recipients. Have you any clue how much food prices have gone up? Who cares what the unemployment figure is , it's the quality of jobs that is a true measure of a healthy economy. Real wages haven't kept up with inflation for years, pensions are a thing of the past unless you work for state, local or federal government, full employer sponsored health insurance is practically a thing of the past too. Job security - forget it. The government caused this mess by encouraging weak lending standards for the disadvantged to help them become homeowners, the mortgage brokers(pseudo banks) took it to the next level and now the govt. with more easy money is killing the dollar and driving commodity prices through the roof.

Stick to what you know about.

[alydar]

Originally Posted by traveler

PA - I hope you are just stirring the pot otherwise you are as clueless as Washington. While the classical definition of a recession hasn't changed, we are certainly flirting with one.
Because early speed is still important, do you ignore 5 off the pace winners and bet the speed?
Washington ignores headline inflation which includes energy and food prices - why? - sure keeps the masses in the dark and keeps down their c.o.l.a adjustments down for SS recipients. Have you any clue how much food prices have gone up? Who cares what the unemployment figure is , it's the quality of jobs that is a true measure of a healthy economy. Real wages haven't kept up with inflation for years, pensions are a thing of the past unless you work for state, local or federal government, full employer sponsored health insurance is practically a thing of the past too. Job security - forget it. The government caused this mess by encouraging weak lending standards for the disadvantged to help them become homeowners, the mortgage brokers(pseudo banks) took it to the next level and now the govt. with more easy money is killing the dollar and driving commodity prices through the roof.

Stick to what you know about.

I have to agree with most of what you have said. At this point anybody that thinks that the current situation isn't serious is simply wrong. We, as a nation are in a precarious situation. It may be possible that we dodge a bullet. But no one shold kid themselves that we can can continue to borrow our way of all of our problems.

[wonatthewire1]

DO SOMETHING!

A lot of crying about something that none of us has any control over. So take what is "given" to you and make the best of it.

When Schering Plough and Merck got smacked at the end of March, picked up a lot of shares at a decent discount. The Schering (SGP) is up 21.2% and the Merck (MRK) is up 8.3% both in 2 weeks.

Since everybody wanted out - I'll get in - especially with companies that are profitable.

...hint, there was one that dropped a lot on Friday - check it out in the upcoming week...

[PaceAdvantage]

Originally Posted by alydar

I have to agree with most of what you have said. At this point anybody that thinks that the current situation isn't serious is simply wrong. We, as a nation are in a precarious situation. It may be possible that we dodge a bullet. But no one shold kid themselves that we can can continue to borrow our way of all of our problems.

Hey, Alydar and traveler, when did I ever state that things WERE GREAT out there? Never.

I know we're in an economic slowdown. I never said otherwise.

[sammy the sage]

by the way...as stated before...in the last 2k years of mankind.

those in charge...GET TO WRITE HISTORY...or RECORD THE FIGURE'S

lier's figure;
figure's lie;

ECT.

[Investorater]

The 185-nation International Monetary Fund and the World Bank readied for weekend discussions following talks among the worlds 7 richest industrial countries.The worlds economic powers endorsed a plan Friday to keep closer watch over big banks,investment houses and other financial firms.
The IMF the lender of last resort for countries in trouble is facing its own hard times.One proposal on the agenda would trim 15 percent of the agencies staff and sell about $11 billion in the institutions vast gold reserves.

The European Economic and Monetary Affairs commissioner,Joaquin Almunia said economic uncertainty has increased,the financial turmoil has affected advanced countries and the risk of a U.S.recession has risen.He contended the European Union was in "a relatively favorable position to absorb the effects of the financial turmoil." "The turmoil in global financial markets remains challenging and more protracted than we had anticipated," G-7 officials said.Japanese Finance Minister stated "The U.S.economy has to get over the economic unrest for what happens in the United States,will affect Asia and other countries.An IMF outlook predicted a mild recession this year in the U.S.the worlds biggest economy.That is seen as raising the risks of a global recession to 1-in-4. www.imf.org -www.worldbank.org

[pktruckdriver]

Come on out here on the road with me and you will see a recession.

I get to go to all these nice places and you will see how bad it is out here.

Get to smell the parking lot on a sunny afternoon, see all the people out here struggling to stay afloat, some working for nothing or less, just praying and hoping it turns around soon.

One this people do not want to see, as you've been programmed to not see this and that is what fuel prices are doing to us, me the truck driver, the one who delivers your goods, the fffffing front liner, the one practically working for nothing, paying over 4.25 a gallon for fuel, yet not getting a penny more to haul this crap we deliver, that keeps America going, well soon enough thses trucks like me, will no longer be able to haul for these rates, hell we can't now, I got a for sale sign in my truck , 20,000 OBO, wiil trade for old race nag, but seriously come on out here see for youself, its here, RECESSION.

patrick