Next week will reveal a lot about the state of our economy:

Institute for Supply Management data – April 1st.
The institutes’s data for March suggests a drop to 48.0 which would signal that the economy is close to falling into a recession.

Joint Economic Committee Meeting – April 2nd.
Ben Bernanke is set to testify before the congressional Joint Economic Committee on the out look of our economy. The committee will discuss whether our economy is already in a recession or heading into one.

Earnings: Best Buy and RIM – April 2nd.
Earnings reports for Best Buy (BBY: chart, web, Y!) and Research in Motion (RIMM: chart, web, Y!) are due out on Wednesday. Analysts expect an increase in Best Buy’s Q4 profits on the heals of 52% increase in Q3 profits. On top of that, earnings are expected to more than double.

Things aren’t as rosy for RIM. BlackBerry sales continue to struggle against the iPhone and Q3 results didn’t live up to expectations. EPS is expected to increase only slightly.

Why you should care? Well, Best Buy is a good indicator of consumer spending. After all, the store specializes in selling products related to discretionary spending (big screen TV’s, music, electronics… stuff we can all probably live without if times are tough). As for RIM, it’s a sign of continued pressure on Tech as a result of competition.

Non-farm payrolls report – April 4th
March non-farm payrolls are forecast to drop 30,000 and the unemployment rate is predicted to increase to 5% (still not bad). This information along with what ever rolls out of the congressional meeting on economics will help determine whether or not we’re really in a recession.

At this point in time, I’m not sure it really matters if we call this a “recession” or not, but perhaps if we can get the government to buy into the fact that we can finally call it a recession, we can move on with our lives.

Economics, Finance, Market Trends BBY, payrolls, recession, RIMM, tech

Between yesterday and todays market action, I’m becoming more and more encouraged that we’re getting closer to the bottom of the market fallout. I’m not sure why I feel that way, because another part of me feels that another shoe may drop, and we’ll be in for another decline.

I heard a comment recently on the radio that there has never been a recession in an election year, mostly due to the fact that those running for re-election become more focused on the needs of the people they represent (i.e. the economy) as those are the people that elect them. Not sure how true that is, but I think that’s a rather general statistic and, after all, all records are broken at some point in time.

By in large, our credit crises has yet to filter in to commercial real estate, and I think it will to some extent. What effect that trend has on the overall stock market is yet to be seen.

There is a lot of money being reinvested back into the stock market today, and I’m curious to see if that trend continues over the next couple days.

My good buddy Winston told me that we’ll know we’ve found the bottom of the stock market decline when the volatility (VIX) spikes to around 30 or so. I’d like to know the rational behind that statement, but in the last five days the volatility has been up quite a bit.

Economics, Investing markets, recession, volatility

It’s been rather entertaining watching the fear spread over the stock markets for the last couple weeks, and I’ve been rampantly sifting through daily data and charts trying to come up with a diamond in the rough. That strong company whose stock price has been dragged down by the falling markets for no better reason than peer pressure.

I find it interesting that Microsoft (MSFT: chart, web, Y!) wrote up an unsolicited take-over offer for Yahoo (YHOO: chart, web, Y!) to the tune of $45 billion (that Yahoo has now rejected). Obviously they saw Yahoo as way undervalued, and made an effort to steal the company amid fear and frenzy that the world is coming to an end, at least financially. Quite honestly, I think it’s an appropriate move at this point, as many are subject to irrational logic in times of immense fear.

But I digress.

In the back of my mind, I’m also thinking I should be recession proofing my portfolio. The most obvious way to do that is with gold or commodities, the later of which I’m already over weight by virtue of my direct involvement in the oil and gas industry. Less direct is overseas funds which may be leveraged less by the US dollar.

Gold has seen a drastic spike in price over the last several months, and looking back, I was a fool for selling my StreetTracks Gold Trust (GLD: chart, web). At the time it seemed like a good idea, but I was a bit short sighted in my move. I even called it in that very post in May:

“I still like the prospects of Gold for a hedge against a falling economy, which readers of this blog will know that I’m preparing for.”

I knew the pressure was building against economy, but I sold the GLD with a bearish near term outlook, and then more or less forgot about the initial plan to use the trust to hedge my bets against the falling economy, fueled by a waning housing market and increasing gas prices…

So I’ve learned a lesson. Stick with the game plan so long as you still believe in the game, and more importantly, timing is everything.

Enough with the cliches.

I’m still eying Gold as a hedge against a falling dollar, but the question remains: Am I now too late? I’d hate to fall into the trap of buying high and selling low.

Gold is flirting with a significant psychological barrier of $1,000 per ounce, and I’m not sure it has the strength to break through that resistance point or not. On the other hand, I don’t believe the economy has hit rock bottom yet, so there may be some fundamental upside left to GLD.

My gut tells me I’m too late, but my brain says buy.

Any thoughts?

Economics, Investing Economics, GLD, gold, precious metals, recession