GDP Contracts For First Time Since 2001

The markets are higher across the board this morning, despite an economic report that showed GDP contracted for the first time since 2001.

Our markets likely took their cue from Asian markets, many of which soared greater than +10% overnight on enthusiasm about global rate cuts and optimism that credit markets are improving.

This sentiment seems to be trumping, for the moment, the realization that the U.S. economy has likely slipped into recession, officially. Initial estimates show 3Q GDP contracted at a rate of -0.3% (vs. -0.5% consensus). Personal consumption showed a -3.1% decline.

I say "officially" because most parts of the economy has been in recession all year, but strong exports in 1H08 kept GDP growht in positive territory, and the govt. won't call it a recession until GDP shows back to back quarters of negative growth.

The dollar is stable this morning, while the Yen is weak again (good sign). The 10-year yield is slightly higher at 3.92%. I think if there were more fear of a very deep recession, the 10-yr yield would be a lot lower. Oil is lower today, but most energy stocks are higher, after some good earnings reports from the oil patch.

The VIX is down nearly -7% today, another good sign, or at least a start. I haven't done any buying yet, but I am still leaning toward using any weakness to put some cash to work.