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Global Economic Slowdown Anything But Over

Here is your little kick-in-the-pants reminder that the global economy is in bad shape and not getting better any time soon. And it doesn't give a damn that every single person on Wall Street (and at CNBC) is exhausted and wants a few days off.

I can make excuses for the selloff, if you want: 1) the volume is light, 2) there has been no concerted wave of selling, just buyers walking away, and 3) we have had a rally for the last week and a half and can't expect to go too far.

The selloff was fairly uniform: most stocks were down 3 to 7 percent. The initial decline was led by commodity stocks, led by ArcelorMittal, which announced they were cutting steel production. Then late day financials led the selloff with Citiand Bank of America leading the Dow down.

The economic news has not only been bad, it has been worse than expected (ISM Services & Manufacturing, for example), and the news for the rest of the week (October retail sales, initial jobless claims, and nonfarm payrolls) stand a good chance of being worse than the already lowered numbers.

In other words, we are RIGHT NOW in the thick of what is likely to be at least several months of just plain lousy numbers.

The bulls believe that we can start talking about a turnaround in the second half of 2009. Why so soon? Because bulls argue that the tidal wave of global financial aid is going to be a lot bigger help than some people think--that the aid donors will overshoot on the generous side and prime the pump in a big way.

The bears find this laughable. Their position is that we will soon challenge the October lows--perhaps before the end of the year, but I often hear January mentioned as a good month to hit new lows.

January, because 1) it is supposed to be an up month and because it will be down it will break the bulls' heart (as it did this year) and 2) by then the next leg of the problem (credit card and auto loan defaults) will have manifested itself and it will be clear that these problems are deeper and more widespread than obvious now.

What this means is that even bulls and bears agree that it will be tough to significantly move the markets forward for the rest of the year. Most stock traders think we will remain somewhere in the range we have been in recently--850 to 1,000 on the S&P 500.

I know only a few brave souls who think we will end the year at 1,200; I know several who think we could be at 800.

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