Michael Santoli: Recession already largely discounted in the stock market

What's clear is that the notion that the economy is vulnerable has become rather commonplace, in contrast to the early moments of the 2001 recession, when 95% of economists polled said there wouldn't be one.

As the folks at Bianco Research noted Friday, the current covers of both the Economist and BusinessWeek are on the recession theme, with the former warning of "America's Vulnerable Economy" and the latter insisting, "Coming Soon: The Consumer Crunch." While Bianco analysts themselves are on high recession alert, they admirably remark: "Keep in mind when we get multiple covers on the same subject, one must consider the possibility that this story has been discounted and therefore will not happen."

The good news is that there's already so much public worry about a recession at a time when the job-and-wage story hasn't yet faltered and when nonfinancial companies are flush. This suggests that -- as in past slowdowns -- if we get only a near-recession, there's plenty of upside risk in stocks.

~ Michael Santoli, "What if It's Only a Near-Recession?," Barron's, November 19, 2007