The Government let us know yesterday that the recession started last December. Most keen observers of the market and the economy figured that out a long time ago. However, that news and the presence of Mr. Paulson and Mr. Bernanke on TV gave the markets the usual result. It swooned with the biggest drop since the Great Depression. Most stocks on all exchanges dropped and half of the gains from last week were erased quickly.
The market will bounce back a little this morning but we would expect the downward trend might continue during the week. Auto sales numbers will be reported today which will likely be weak. Sears already announced weaker numbers this morning as did MMM. GE is broadcasting to investors and analysts this morning that they will keep their dividend for 2009 but their numbers will be at the low end of expectations for 2009. The company expects to resume 10% growth in 2010. The stock is up a little on the news.
Expect volatility to stay high as we saw with the soaring VIX yesterday. As we have been saying, it will take time for the markets to adjust to the economic climate but we are in the bottoming process and in time (perhaps a few months), the market will start to move in the right direction.
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