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Does a Recession Even Matter?


How to trade through profit warnings, weak economic data.


Greetings from New York where both 1Q and Jeffmacke are limping to a somewhat uninspired close after a hyper three months. Here's what I'm reflecting on as I get ready to don the shirt and tie in Times Square one last time for the week:

  • Retailer Boot Stomping: Add JC Penny (JCP) to the heap of retailers and apparel companies warning this week. DSW (DSW) and William Sonoma (WSM) all spent some time in the shed this week, warning, taking down numbers, eliminating guidance (DSW) and, in the case of WSM, calling this the worst downturn since 1990.

  • What's it mean? It means we're most likely in a recession; a fact that is neither tradable or of much importance, in terms of distinguishing between it and the sub 1% growth of 4Q.

  • Add Michigan's survey to the heap of "the consumer is bummed" news this week. No surprise, no big whoop. Let's just blame it on a U-Mich Chris Webber flash back related to March Madness and move along, shall we?

  • Electronic Arts (ERTS) has amended and extended its bid for Take Two (TTWO). TTWO has already done a poison pill, solicited other bidders, changed its annual meeting date and generally tried to buy time until next month's release of Grand Theft Auto IV. Title fatigue has set in with GTA but the latest iteration is getting great previews, regardless. TTWO's board is, in effect, betting the whole shareholder bank on success.

  • In other take-over news, look for some resolution on the Yahoo (YHOO) - Microsoft (MSFT) saga early in 1Q. I'm long Yahoo and rather banking on a scenario involving a bumped bid of a "Take it or leave it" nature from Redmond.

  • Oil down, S&P up and the quarter ending. Too obvious to expect a plus-200 Dow kinda close to the trading quarter? I wouldn't bet against it.
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Position in YHOO

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