I just read a story where Larry Summers, White house economic advisor, is blaming the weather for a potentially ‘distorted’ jobs report this Friday. Seriously, we are still going with the bad weather? It must be snowing everywhere, the UK, Greece, China, the Ukraine, Dubai, etc. The data all over the world, including today’s ISM number, is rolling over and in some areas it is just plain scary. I got news for you, it has nothing to do with the weather, at all.

Over the past few weeks more and more companies announced layoffs, not a good sign, and the initial claims data went way up over the past 4 weeks. The data started to roll over before the snow hit the ground. Not to mention, but the last time I checked it usually snowed in the winter time anyhow. I realize we had a few days of snow, but nothing major and it is beyond me how snow would be firing people. I will say that the weather impacted retail sales, but not all this other data.

Let’s not forget that the vast majority of the bad weather was also in the Northeast so I am very excited how the bad weather in NY caused California to have increased unemployment figures. Never in my life have I seen such a snow job being perpetrated by the talking heads and now Washington blaming bad weather for horrible economic data. What will happen next month when we have even more layoffs and there is no weather to blame? Maybe we will blame the sunshine because people are so broke they cannot afford sunglasses… wait that kind of admits the economy stinks, never mind.

My point is that the data, well before the snow, rolled over viciously and it is the economy that is the problem. We are over 2 years into this thing, recession/depression, whatever, and we are still losing jobs, that is not good. The unfortunate part is we spend trillions only to be in a position where employment is continuing to contract. It is fair to say that the stimulus probably helped a little, but clearly it was not as big of a help as the administration claims. As an aside, it will be interesting to see if some municipalities file for bankruptcy in the next couple of weeks, maybe that is because of the bad weather as well.

We keep hearing that we cannot count the consumer out and they will spend to support our robust 2.8% GDP growth we clocked in at last quarter. The experts all claim that same store sales are great, but they forget to tell you that most companies closed down tons of stores and Best Buy is benefiting from Circuit City’s failure. However, all the cheery news we are hearing does not jive with Black Friday’s relatively dismal sales.

According to the NRF consumers spend .5% more this Black Friday than last year, which sounds great, right? Not really. Considering a year ago we were on the “brink” or “abyss,” or any other term you want to use to describe horrible, sales were only up .5% when things were so good? I am sorry, but that does not fit with this strong recovery story being thrown down our throats like it is going out of style. If we were in a recovery or things were as good as we are being told sales would have been estimated to have been a lot higher than .5%.

Not only that, but who believes you get the best deal on black Friday? History has proven that the longer you wait, or buy online as most shipping is free, the better the prices get. On top of that, I did not hear one report of anyone getting trampled to death at Walmart, so I find it hard to believe sales were even up .5%. Not that I am rooting for anyone to get hurt or anything, but with a .5% print we should have seen some good pushing and shoving on the news, I got nothing up where I am.

While I do believe things are better I do not think they are nearly as good as being reported. Even David Rosenberg, who may not be the best market forecaster, but is one heck of a economist, is using the term depression to describe our current situation. I know, there are no soup lines, but here is what you need to remember about a modern day depression, we have unemployment, Social Security, food stamps, a whole variety of other public and private organizations dedicated to helping those less fortunate. In other words, this is not your grandparent’s depression.

Do I think we are really in a depression? If we are not it is very close to one and denying that is crazy. What else would you call 10.2% official unemployment, 17.5% U-6 underemployment? Considering U-6 is how we measured unemployment during the 1930’s I think 17.5% qualifies as a depression, but hey let’s not let facts or history get in the way of a great recovery story. I am a whole lot more optimistic than I was as long as other countries keep printing money as well, but the minute they stop and we continue I will be extremely pessimistic as that is when we head for real trouble. In fact, even with others printing money we are in trouble, but I digress. I believe in America and know we will get through this. However, if government does not get its act together and get out of the private sectors way, well, we will have soup lines again.

The Asian markets were mixed with the Nikkei trading flat, but China and Hong Kong are down about 3 and 4% respectively. The US futures are volatile, which is not uncommon in overnight trading, but showing a small loss at the open for the US.

Korea did cut interest rates by .75% which is a first emergency cut since 9/11/01. This shows continued world wide efforts to try and stop the pending global recession. These efforts will have some impact, but will not stop a recession.

As stated before, Asia is an indicator of how deep the recession could be as they are our manufacturing center. With the Nikkei at 26 year lows there is major pain heading our way. While the events we have right now are unprecedented and the emergency measures may stem much of the pain it is clear that only time will tell whether these efforts will have worked or not.

The times we live in right now are historic. We staved off the complete insolvency of the world banking system, which was a very real situation on 10/10/08. The world almost went bankrupt, it was that severe. However, the governments have stopped a potential major depression, but we still face the toughest recession, borderline mini-depression, is still on the horizon.

In the meantime, we expect, obviously, choppy trading in the AM and a relief rally by the end of the day. Of course, this is speculation, but indicators point to some strength in the markets, for a change. We could see a dramatic rally in the near future, perhaps spectacular like the 900+ point rally on the 13th. We recommend selling into that strength when it happens as you will be able to buy stocks cheaper soon after that potential rally.

These are the times when variable annuity living benefits are earning their “high” cost. All the pundits who said they are too expensive and recommended index funds instead should all be fired. They are flat out wrong, unless 40% declines in portfolios are a good thing…