THE OUTLOOK

While perusing the Feb 6 issue of S and P's Outlook newsletter a few things hit at me. First, S&P has increased its "chance of recession" number from 40% a few weeks ago to 60% in the current issue. In addition, since there is a high probability of recession, one should overweight staples (12.5%), health care(13.3%) and utils (4.6%) and underweight consumer discretionary (7.9%), financials (17.1%), industrials (10.7%) and information tech (14.8%).

Looks to me like rear view mirror investing and my guess is underweights will outperform overweights going forward.

And an interesting comment out of the guy at Thomson Financial this morning- he sees a shot that financials may have to "write up" some of the loans they wrote down last year - I wonder what the market reaction would be to an event like that?