Argus

Fully Discounted?

For the first time in what seems like an eternity, the stock market did next to nothing during the session yesterday as the intraday range of the Dow came in at a paltry 155 points. This despite some pretty glum economic data, new worries over Goldman Sachs (GS), and more carnage in the auto sector. Thus, the bulls can be heard crowing about the idea that the vicious decline seen in October has fully discounted all the bad news that is likely to come out.

As we highlighted in our weekend report, it does appear that the drop of 42.3% on the Dow over the past year and the 45.8% decline on the S&P 500 is enough to discount a typical recession. We pointed out if one looks back at history’s Bear Markets that were accompanied by a recession (but not a depression); the average decline came in ...