Speaking to the upcoming recession, Volvo reported last week that orders swooned 99.63%, which left CEO Leif Johansson exclaiming, “We’re heading toward the sharpest downturn I’ve ever seen in Europe.”

Meanwhile, the Baltic Dry Shipping Index fell below 1000 for the first time in 6 years, suggesting it’s now 90% cheaper to ship goods over the ocean than it was at the beginning of 2008. Furthermore, ISI’s Auto Dealer Survey fell to a record low of 27.5, consumer spending for 2008’s third quarter will likely be -3% (the biggest drop in 30 years), air-freight traffic dropped 7.7% in September, US consumer confidence collapsed to a record low in October, the default rate among sub-investment grade borrowers is surging to 7.9% from just 1.3% a year ago, and the nation’s debt rose $506 billion between September 30th and October 30th, causing one Wall Street wag to sigh, “What a mess!”

Despite the lousy news backdrop, the SPX spurted over 10% last week. And when stocks ignore bad news, that’s good news. We think, after a Presidential Pause early this week, the equity markets will continue to trend higher into my firm’s targeted Thanksgiving date.

Yet while last week’s SPX gains were spiffy, the real winners of the week were things like lead and nickel, which soared 28%, consistent with my firm’s bullish near-term “call” on commodities. Accordingly, we’re “long” ETFs playing to our aforementioned themes, some of which are hedged.

The call for this week: The durability of the current advance is rooted in the ability of credit spreads to stabilize and continue to contract. Meanwhile, all eyes will focus on tomorrow’s election. As Raymond James economist Dr. Scott Brown notes,

“No one could get elected campaigning on a balanced budget platform since that would entail tax increases or large cuts in entitlements. But is it too much to ask that our candidates realistically address the budget issue? Does it have to be about personality? The sad truth is that we get the government that we deserve.”

I continue to invest, and trade, accordingly.