A crucial December jobs report hits the Street Friday morning. What's the trade as economic uncertainty grips the market?

Michael Darda is MKM Partners chief economist and he joins the panel for this conversation. Following is a summary of his main points.

Darda believes that the economy is not headed for a recession, although he concedes it could be slowing down. He adds, even this week's ISM number, which showed a sharp contraction in manufacturing but not other areas of the economy, was not low enough on a historical basis to suggest recession.

Jobless claims are a leading indicator of the economy, he adds. They usually go up 25% year over year ahead of recession. We’re up 7.5%.

And even if we are in a recession, adds Darda, I think valuations are very reasonable, which limits downside risk. Stock valuations versus bond valuations (as expressed by the earnings yield relative to yield on treasuries) are at compelling levels, suggesting that stocks are cheap compared to bonds.

This was totally different in 2000, when bonds were cheap to stocks. Thus, if we are in a recession, it appears investors have priced it into the market, he concludes.

My best trade is long stocks and short bonds, he says.

I likes the Retail HLDRS

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[RTH  Loading...      ()   ](RTH) below $90 Jeff Macke adds.

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Trader disclosure: On Jan 3, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO); Seymour Owns (F), (MER), (MSFT), (MBI), (INTC); Seygem Asset Managemetn Owns (SSL), (TTM), (CTCM), Gazprom; Gazprom Is On Pink Sheets In The U.S. But Trades On The Exchange in London; Jon Najarian Owns (AGU), (C), (DE), (GS), (MON), (MOS), (MRO), (POT), (GOOG), (YHOO), (VCLK), (DRIV), (SLB), (UBS), (USB), (IM), (N), (NEM), (MOO), (AG), (NYX), (NDAQ); Jon Najarian Is Short (PNRA), (SFLY), (TSO), (VLO), (YRCW); NBC Universal Is The Parent Company Of CNBC

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