At 3:00 AM this morning, I was watching Bloomberg as the European markets opened and heard “stocks slide around the world as the U.S. slips into recession.”  Talk about a rude awakening!

The U.S. may slip into another recession, especially if Europe cannot get its act together, but the odds are no worse than 1-in-3.  While the Philly Index yesterday was surprisingly bad, GDP growth increased from the first quarter thru the second quarter.  Economists almost uniformly predict positive growth in the third quarter as well. 

What Bloomberg meant to say, I think, is that the U.S. is slipping into a bear market, which is different than a recession.  Unemployment doesn’t rise during a bear market, except on Wall Street.  GDP also doesn’t fall, just because there is a bear market on Wall Street.

Technically, a bear market is when stock prices fall 20%, and the S&P has only fallen 17% . . . so far!

I expect we will officially enter a bear market today.  Futures indicate the S&P will open lower about 15 points, and the Dow will open lower about 130 points.  In addition, Friday afternoons are often ugly as traders sell everything to stay in cash over the weekend, when headlines are unpredictable.  Lastly, it is a “witching” Friday, meaning some options and futures contracts rollover, which also adds to volatility.

Don’t watch the market today!  Enjoy the waning summer season this weekend!  I’ll be watching the futures market for you . . .