Carl Tannenbaum of Downers Grove is an economic consultant.
What moved the markets last week?
"I would summarize this week in the market by saying that conditions probably drifted further from being settled in both the credit markets and the stock market. The uncertainty about the economy, the uncertainty about the credit worthiness of certain companies and institutions still seems to be hampering performance of investments."
Do the markets have a momentum in any direction?
"There is really a negative tone to all the markets. The stock market continues to lose ground, albeit at a gradual pace. But when you add up the poor performances we've had this year, it does amount to, overall, a pretty important correction. And the uncertainty is being heightened by some of the actions and statements we are getting from our policy makers and our central bank."
What comments by the Fed are you referring to?
"Chairman (Ben) Bernanke was out this week, again, offering comments. But this (time) his comments included the observation that there are some banks that are likely to fail. And there was the request that banks begin reducing the principal amounts on mortgages that are owed to them. Now, both of them may have been very candid remarks, but there are some who say they would best have been made in private."
Are we in a recession?
"News (on Friday) reinforces the view that we are in a recession. That is a view, I admit, I hold. I think the economy will contract during the first quarter of the year and may contract again in the second quarter of the year. We have gotten by, given the housing correction and the market correction so far, largely because we were still creating jobs and those people with jobs were seeing their incomes increase … The news that we are going to lose jobs instead of creating them and that wage levels are beginning to slip, removes one of the last supports for the spending everyone is relying upon."
What could move markets this week?
"The economic calendar is relatively quiet. We'll get readings on both retail sales and consumer prices. But I think we'll be closely watching the efforts of the Fed to stabilize the liquidity in the market."