Recess or recession? Are we playing or being played by government numbers?

In April, the Commerce Dept. projected that first quarter GDP - the broadest measure of domestic economic activity - grew by 1.3%. As usual, the government number crunchers were wrong. Not only wrong, but wrong by more than 50% as the latest estimate was announced today at 0.6%. A couple more revisions and we'll officially be in recession. We may be already... probably are... but it doesn't really matter.

Leave it to the federal government to botch statistics in such a monumental manner, though it hardly manners to the average US citizen or investor. At the other end of the economic food chain, however, the big fish may not take the news so readily. Many investment decisions are based on economic data, and, at the very least, news of a recession looming is likely to send some of the weak-kneed types scrambling for the exits, and that's just fine. More profits for the brave.

Dow 13,627.64 -5.44; NASDAQ 2,604.47 +11.88; S&P 500 1,530.62 +0.39; NYSE Composite 9,978.63 +15.02

Based on today's trade, there was some effect from the figures, though it was muted. These macro-economic figures are tough to wrap one's mind around. First, nobody really has a handle on the real, raw data; second, there are rounding errors, adjustments for inflation, the foreign value of the dollar and other considerations in the nebulous world of economics to consider. The margin of error is probably around 1 1/2%, so when we get close to zero, it could be a positive or negative number.

Really, there's no good reason to get agitated over a decline in the GDP unless it's substantial, like 3 1/2% or more. Even then, recessions are natural and necessary cycles in robust Keynesian economies. Recessions are just the normal response to excesses - of which there have been plenty of late - as a way of balancing the books, so to speak.

Also, recessions are barely noticeable on the surface. Life goes on, some businesses do well while others have to tighten their belts a bit, but, unless the recession is long and deep, the economy in question usually emerges stronger for the experience.

We won't know for sure when we're in a recession for at least another 2-3 months, if at all. If the first quarter was actually contracting, so too would the second quarter have to be, as the most widely-accepted definition of a recession is two consecutive quarters of negative growth, or contraction. Fear not, even if we are already there, it's not going to hurt much.

Besides, annual GDP for the US is in the range of $13,000,000,000,000. That's 13 TRILLION Dollars. a 2% decline would be $26 billion. Believe me, nobody, especially you and I, is going to notice.

In any case, advancing issues were ahead of decliners by nearly a 3-2 margin. There were a preponderance of new highs: 568, to a mere 65 new lows.

The price of oil crept up another 52 cents to $64.01. Gold shot up $7.40 to $666.70. Silver was higher by 25 cents to $13.47, though both of the precious metals have been stuck in a narrow range for the past 14 months. That's why numismatists are called "collectors" and not "investors."

Stocks Soar; Dow, S&P Set New Records

It was business as usual for US equities, but today may prove to be especially important as the S&P 500 - regarded as the broadest measure of US corporate strength - made a new all-time high, eclipsing the previous record of 1,527.46, reached on March 24, 2000, just before the dotcom boom went bust.

Just in case anybody was still wondering about the effects of a China meltdown, a la Alan Greenspan's warning of last week, the AP reported earlier in the day:

The main Shanghai Composite Index tumbled 6.5 percent at 4,071.27 after hitting a record high on Tuesday. The Shenzhen Composite Index for China's smaller second market fell even more, closing down 7.2 percent at 1,199.45.

So, we can put that "all markets are related" canard to rest, along with the eminently detestable Mr. Greenspan and his worthless pronouncements.

Dow 13,633.08 +111.74; NASDAQ 2,592.59 +20.53; S&P 500 1,530.23 +12.12; NYSE Composite 9,863.61 +71.12

The Dow Industrials also set another closing high, though that's become old hat by now. With the S&P finally in record territory, the markets could actually break out from here, and that looks very likely in the near term.

The rationale continues to be healthy corporate profits, manageable macro-economics, low interest rates, an accommodative regulatory environment and lots of cash looking for places to invest. The beat goes on.

Not even the oil business could disrupt Wall Street's enthusiasm. As it was, oil was only 34 cents higher, closing at $63.49. Nobody noticed, especially on Wall St., where traders either take trains, limos or are making so much money they don't care.

Wall Street's gain was precious metals' loss. Gold sunk $4.10 to $659.30. Silver was unchanged at $13.22 the ounce.

Advancing issues were ahead of decliners by a 13-8 margin. There were 341 new highs, 95 new lows.

Another Nice NASDAQ Notion

Tech stocks are all the rage again, at least for today. The biggest gains were once again in the tech-heavy NASDAQ index, which was up better than a half percent on a day that the other indices barely budged.

Dow 13,521.34 +14.06; NASDAQ 2,572.06 +14.87; S&P 500 1,518.11 +2.38; NYSE Composite 9,892.49 +16.38

As mentioned here in previous posts, there are good reasons to like tech, especially internet or chip-related issues. Many businesses begun in the red-hot heyday of the 90's are now mature or maturing, solidifying their market positions and bringing down exceptional profits.

Tech fell somewhat out of favor after the dotcom bust of 2000 and it's yet to fully recover. The NASDAQ index is still only half way back from its all-time high, so there are undervalued companies with plenty of upside. Besides that, the blue chips are somewhat overbought and fund managers are looking to mid- and small-caps for more gains in the 2nd half of 2007.

The M&A hawks are also on the lookout for takeover or take private companies in tech. Many of the best have market caps of less than $30 billion. Tech takeovers could be de rigeur in the waning years of the 2000s decade.

Overall, advancing issues surpassed decliners by a nearly 2-1 margin on light volume. New highs checked in at 305, while there was nary a new low to be found - only 73 of them on the day.

The lack of volume was indicative of two matters: Summer and complacency. The nice weather is usually a harbinger of a prevailing slowdown in trading activity. There also was a paucity of economic and/or corporate news to digest, though the consumer confidence numbers released by the Conference Board were surprisingly upbeat and that set the tone for Tuesday.

And, shockingly, with the holiday driving done for now, the price of oil magically fell on the NY-MERC, as light, sweet crude dropped $1.90 to close at $63.30. Drivers should expect some - though not much - relief at the pump over the next three to four weeks. Of course, prices will go higher as the 4th of July holiday approaches due to (wink, wink) supply and demand, of course.

Gold and silver made modest gains but remain rangebound, depressed and somewhat overpriced.

It's a short work week, so expect the most volatility - if there is any at all - to occur on Wednesday and/or Thursday.

Stocks Rebound From Greenspan's China Gambit

Shares of US equities rebounded on Friday ahead of the Memorial Day weekend, apparently shrugging off suggestions from former Fed chairman Alan Greenspan, who opined that China stocks were overvalued and needed "correcting." Well, that's his opinion and China is China, not the USA. Stocks in the US are still the "gold" standard by which all other markets are measured, as the US is seen by most as having the most stable and mature markets. Risk is spread out among multiple millions and billions of shares on many stocks, adding to the appeal.

Adios, Mr. Greenspan. Have a nice retirement.

Dow 13,507.28 +66.15; NASDAQ 2,557.19 +19.27; S&P 500 1,515.73 +8.22; NYSE Composite 9,876.11 +63.60

All major indices were up smartly on the day, with the NASDAQ once again getting the best percentage gain (0.76%). Techs truly rule in this environment and many companies have been growing by leaps and bounds since the meltdown of 2000.

Stocks overall were led by a better than 2-1 margin of advancing issues over decliners.

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However, there were only 167 new highs and 98 new lows, the closest those two measures have been to each other in quite a while - well over a month. The lack of new highs - down significantly from the 400+ a week ago - may be due to profit-taking. There's no sin in taking profits on a stock that has made new highs and the end of May, in the midst of a long, long bull market is certainly not beyond reasonable trading etiquette.

While stock traders were having a solid day, so too the players on the oil bourses, who pumped the price of crude up another $1.02 to $65.20. Gas prices are at an all-time high in the US - that's not news to anybody - and after this holiday weekend, something has to be done to ameliorate the heavy price consumers are paying. The gluttony of the oil companies still threatens to derail the entire US economy, though, sadly, the Congress and the president have not shown leadership on the issue of protecting the public well-being.

Gold and silver gained marginally, but are still at multi-month lows.

For the week, the Dow fell by 49 points, the NASDAQ was down 1 point and change, the S&P 500 lost 7 points. Better days are just ahead as the S&P hints towards an all-time high.

Thanks, Mr. Greenspan!

The markets responded both in China and the US today after former Fed Chairman Alan Greenspan issued a general warning about the overvaluation of stocks on China's exchanges on Wednesday. As expected, the fallout was felt on the Shanghai B-index of stocks demoninated in foreign currencies, which fell 8%, in Europe and on US exchanges.

Greenspan's comments coincided with a warning from Chinese government officials about the risks of investing in equities. As usual, investors were spooked by people who should have nothing to say and no influence over markets. Sadly, loudmouth outdated louts and know-nothing government squawkers are part and parcel of the risks of investing. They've been intruding and manipulating in open markets for centuries and their influence seems only to be growing.

Dow 13,441.13 -84.52; NASDAQ 2,537.92 -39.13; S&P 500 1,507.51 -14.77; NYSE Composite 9,812.51 -101.15

Other news included a 16% jump in new home sales for April along with an 11% drop in median prices from March to April. The year-over-year decline in median price of 10.9% was the biggest such decline in 37 years. The housing market is deflating - and quickly - while screaming "buyer's market" to potential home owners and speculators.

Sporadic reports also surfaced in newspapers and on the web pointing out what most Americans already know. Food prices are running very high, especially for quality meat, fruit and vegetables.

Besides food, high gas prices continue to eat away at Americans' wallets, though oil for July delivery fell $1.59 to $64.18. That price is still $4 to $5 higher than it can be before drivers can hope to see any noticeable impact at the gas pump.

Declining issues overwhelmed advancers by a 7-2 margin and the number of new highs was 222 - the lowest number in more than a month. 105 issues recorded new lows.

The metals took another dive on Thursday. Gold was down $9.30 to $653.30 while silver lost 19 cents to close at $12.92.

Stock prices are influenced by all kinds of data, noise, news and reportage. The mouthings of unofficial spokesmen, such as Alan Greenspan, should fall under the noise category. He has no more clue about the direction of markets, or, more pointedly, their valuation, than any b-grade stock broker. His irregular incantations and bemoanings ought to be ignored.