Take on the ticker

Why are the major markets significantly down this month?"This is probably one of the worst Januarys we've seen. The financial sector is taking a beating because of their subprime (lending) problems. And its crossing over to places you wouldn't normally expect -- to Merrill Lynch, UBS and Wachovia. Investors tend to react emotionally when they hear bad news #8230; This (downward move on the markets) is more emotional than it is financial."Are we already in a recession?"Potentially, we are in a recession. All the indicators are there. It's just that sometimes you don't know you're in a recession until afterward. Investors are pulling back. Consumers are spending less. Earnings are falling #8230; Housing is down. Oil is up. Unemployment is up. All these indicate we are definitely in a recession."Does that mean we're going to see poor market performances?"At least for the first half of this year, we'll see a very weak stock market."What do you think of Fed Chairman Ben Bernanke's comments?"They definitely were a positive if (interest rates are lowered significantly, as Bernanke indicated might happen). Costs go down. People spend. Companies spend #8230; It would be a short-term positive, initially. Long term it puts us at risk for higher inflation #8230; Inflation is already raising its ugly head."Have oil prices topped out?"I'm guessing we'll see oil at $150 a barrel (currently oil is valued in the $90 a barrel range) this year. (Organization for Petroleum Exporting Countries) doesn't want this to go down. It is not going to increase output #8230; It's not only a matter of our demand for oil; China needs it to for its growth."What might move markets this week?"In the coming week, we really have to look at the leading indicators. The Producer Price Index, which measures the production of finished goods, is coming out. This index will give us an idea of the recessionary cycle #8230; It's a good measure of inflation. Also, housing permits come out, which are new orders. They stay low until the current inventory of housing is reduced."