“Capital Insights” with Jack Kern

I’m Going With Mickey on This One…

There are a lot of economists and frequently quoted business commentators who are out there forecasting the recession, or their view that we’re not in one yet…

Even venerated Sam Zell, senior scion and master of the multifamily industry commented recently that he thought we might slip into a recession next year.

Jack Welch, former General Electric chief is saying he thinks we’re headed for a deep recession with the first quarter of 2009 being the toughest.

The President said without the bailout package, we’re going to suffer. This just in on the housing front:

The rate of existing home sales decreased 2.2 percent to an annualized pace of 4.91 million units with the median home price declining a record 9.5 percent to about $203,100, the National Association of Realtors reported Wednesday.NAR also said as many as 2 in 5 home sales were by borrowers who have seen their property lose value or are facing foreclosure.

Now let me show you something. My colleague and one of the best known market watchers, Bob Bronson of Bronson Capital Markets (check out his website at this url, http://www.financialsense.com/editorials/bronson/main.html and tell him that Jack sent you) has followed markets for lots of years and tons of cycles. To the best of my knowledge, Bob hasn’t been wrong yet, not only about recessions, but about stock markets. Here is one of his charts that is pretty convincing:

The chart shows that the levels of economic activity that usually indicate fiscal stress are definitely trending down. Without a doubt, we’re already in a recession, but for a lot of reasons, professional forecasters don’t want to admit it. That’s why I checked in with the most accurate forecaster I know.

Mickey Mouse.

I believe that there is a powerful force on earth, one that cannot be ignored and has the capacity to move markets. It’s made up of little kids who cajole and nag their parents and beg and plead to go to a Disney property. Disney is, after all, a rite of passage and a favored vacation spot. Disney’s latest quarterly results showed an increase year over year results, but the real figures I’m interested in showed a decline in theme park attendance. With a drop in people taking this national vacation ritual, it clearly shows the recession has taken hold. We don’t need powerful pundits and scholars to tell us that 2 consecutive quarters of declining GDP are the technical definition of a recession. We have the mouse. I did try to contact Goofy, but he was unavailable for comment. Apparently he was planning to run for the chair of the Republican Party in Orlando