1.    There is daily ongoing talk by any number of economists as to whether the U.S. is in recession.  What at these economists thinking?  Who is kidding whom?  Irrespective of ‘economic modeling’ and historically based ‘measurement of what constitutes a recession as economists assess such things’, as a practical matter I can’t see how the U.S. currently is not in recession based on:

•    continued drops in housing prices, foreclosure increases and housing sale stagnation;

•    reported lack of consumer confidence;

•    the extent of existing U.S. consumer credit;

•    bank credit extension issues (read ‘Bail-out Strategy’);

•    and so on,

how can the U.S. not be in recession?  Moreover, I believe it stands to reason that said recession will deepen before we see improvement.

2.    My sense is that many Investment Advisors, including those at the high end of the investment advisory spectrum, simply find it incomprehensibly that what is happening in the markets indeed is happening, and are firmly entrenched in the belief that all will be well once the current ‘correction’ has passed us by. Having regard to the fact that many investors rely heavily on these investment advisors, I consider these views unrealistic, frankly naïve in the extreme, and downright frightening.  One of these Investment Advisors, who is without question in my view intelligent and unflaggingly believed that the broad stock market indices would not erode materially when the Dow was at 13,000.  He has given me various versions of ‘why he thinks this’ over the past two years.  Most often, his reasons that the market weighs all probability into stock prices and hence material erosion could not occur.  He has been closed minded with respect to any other outcome, irrespective of the reasons and statistics given to him.  In a conversation last week he was so discombobulated that part way through the conversation he began to talk in garbled sentences.

3.    I continue to believe retail consumers are the key to the economic puzzle and where we are headed economically.  If we see continuing drops in consumer spending at the retail level in the U.S. and elsewhere I strongly believe we will find that neither the U.S. Government or any other world government has enough ‘fingers’ to plug the holes that exist, and are threatening to develop, in the world economic ‘dike’.   Winter is coming on in Toronto, but we haven’t got enough cold weather here to ‘freeze solid’ all the water in the world to stop the ‘dike’ from overflowing if economic conditions worsen from here.

4.    I suggest you pay careful attention to the U.S. Retail Sales number that is generated on ‘Thanksgiving Friday’.

Stay tuned.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. See Legal Disclaimer.

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