Recession? Don't Rule It Out

The recession? If you were on the conference calls I was on today -- General Motors(GM Quote), Home Depot(HD Quote), Maytag(MYG Quote), you would have to be worried. I know that you don't think we could have a recession with the massive employment growth in this country, but stocks don't lie.

Truth be told, no one thought we could have one in 1990 either. But the stocks told the truth then too. The key to a recession-watch is, of course, layoffs. I could make a case that General Motors was way too bullish on its calls vs. the facts. I could have made a case for production cutbacks. Why should we care? Because we will not get any easing without production cutbacks. They are a necessary part of the mix.

I know that it seems absurd, in one day, to be thinking about inflation and recession, the so-called 1974 bear scenario, but this day has pretty much seen it all, so I can't rule it out. Remember, a Fed move to neutral is integral to a bottom. We need to see it. We need to have it. We may have to anticipate it.

But not until we see the layoffs. And I don't mean dot-com layoffs. That market is in a depression already.