It's not a recession yet! Revised GDP came in unrevised at +0.6% for the last quarter. Recessions are defined as two consecutive down quarters of GDP. Except if you want to make a point, then you define a recession as a prolonged period of economic weakness. But that's like saying it's a recession since your brother-in-law lost his job, but a depression if you lost your job. So, it ain't a recession yet.
Also, the weekly unemployment claims don't indicate (yet) that a recession is occurring. Claims were down 9,000 to 366,000, and the four-week moving average we focus on was up a small 1750 to 358,000. As I have said before, the four-week average needs to be around 400,000 or worse to indicate an economic contraction. So, it ain't a recession yet.
Meredith Whitney, financial analyst at Oppenheimer, and the hottest hand around on these stocks, issued a report today that said, among other things, Merrill
(MER)
will surprise us with a much bigger write-down this quarter. I wouldn't disagree with her. She has been spot on.
But at this moment (just before lunch), the stock is off pennies, and the market is trading sideways. At some point, all the bad news is discounted, and I have been thinking we passed that point the end of January when the Dow hit 11,600 intraday and the S&P touched 1270, setting a bottom that has been tested a couple of times and seems to want to hold.
Next week brings the all-important jobs report and the consensus seems to be for a very small gain, and the worst forecast I have seen is Merrill's, with a loss of 75,000 jobs. The handicapping will continue all next week, but remember, the last recession saw an average decline of more that 200,000 jobs per month for each month of the recession.
On this date in 1998, Viagra was approved for marketing. I'm not dumb enough to try to add a clever quip.
Vincent Farrell Jr. is a principal of Scotsman Capital Management. Prior to joining Scotsman in April 2005, Farrell was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships. He is a regular guest on CNBC as well as other national print and broadcast media.
Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.
Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.
