Worse-than-Average Recession to Drag Down Stocks, Merrill Strategist Says

[marmar]

....but, but I thought the stimulus checks were going to create the greatest boom since the Model T? :shrug:



from Bloomberg:



Recession Will Drag U.S. Stocks Lower, Merrill Says (Update1)

By Lynn Thomasson

June 23 (Bloomberg) -- U.S. stock prices have further to fall because consumer spending is ``hobbled'' and record food and energy prices point to a worse-than-average economic recession, Merrill Lynch & Co. said.

The Standard & Poor's 500 Index has never tumbled to a low within the first three months of a contraction, said Brian Belski, Merrill's U.S. sector strategist. The 19-month low reached on March 10 was about 2 1/2 months into the current recession, according to David Rosenberg, Merrill's chief North American economist.

``This is not your average recession,'' New York-based Belski wrote in a report today. ``We would urge caution for investors attempting to call the bottom in the current environment.''

Increasing writedowns and dividend cuts from U.S. financial companies and record prices for oil, coal, fertilizer and rice signal that the U.S. economy is shrinking for the first time since 2001, Belski said. Gasoline prices have climbed to more than $4 a gallon nationwide after oil futures reached a high of $139.89 on June 16. The world's biggest banks and securities firms have lost almost $400 billion from asset writedowns and credit market declines tied to the U.S. subprime mortgage market collapse.

``Given that our economy has always relied heavily upon the consumer, we find it hard to believe that this will be an `average' recession when it appears that the consumer continues to weaken,'' Belski said.

The strategist said investors should ``not be fooled'' by the S&P 500's 12 percent gain between March 10 and May 19 because the advance doesn't indicate a turnaround in the economy. The stock benchmark has fallen 7.5 percent in the past five weeks.

The S&P 500 rose 0.3 percent to 1,321.58 at 1:52 p.m. in New York.


http://www.bloomberg.com/apps/news?pid=20601087&sid=ay9wCzoaLtkk&refer=home

[Andy823]

1. How can

The economy get better as long as big corporations are screwing the consumers? Seems like all the big corporations who "really" run the Bush administration, are trying to make a killing before he gets out of office! With gas prices so high, and food rising right along with gas prices, how in the hell could anyone not see that things will get worse? Congress needs to take on the problem and put a stop to the Enron loophole, shadow markets, and speculators driving up the price of fuel. If fuel cam down, so would food prices. Throw the assholes that are causing the problems in jail!!!!!!!!