In Thursday's post, "It Keeps on Coming," I noted that numerous indicators have signaled that a recession is imminent. Adding further fuel to the contractionary fire is Friday's news that first quarter Gross Domestic Product came in at a much lower-than-expected 1.3%.
For equity bulls, any sign of economic weakness has been seen as a positive for stocks, based on the curiously convoluted logic that it would force the Federal Reserve to loosen monetary policy. In fact, five decades of market history suggest that recessions are, for the most part, bad for share prices, at least during the first six months -- regardless of what the Fed does. So much for Goldilocks.
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