Zacks Analyst Blog Highlights: Campbell's, Kraft,Northrop Grumman and L-3 Communications.

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Campbell's (NYSE: CPB), Kraft (NYSE: KFT), Northrop

See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673

Here are highlights from Tuesday's Analyst Blog:

Are We In a Recession?

It is a very open question at this point. Usually a recession is not officially declared by the National Bureau of Economic Research until we are almost half way through it. However, the evidence is starting to mount that we are, or soon will be.

At the very least we are in a "growth recession" or a period of several quarters of extremely soft growth. To most people, a growth recession will feel like a real recession, and the investment implications are similar to a real one. The stock market is a discounting mechanism, and in and of itself can shed some light on the future course of the economy. Indeed it is one of the components of the index of leading economic indicators.

So what is the market saying right now? It is signaling a resounding "maybe." The market is almost invariably (a semi exception in 1980, but it sure was lower in real terms given the high inflation back then) lower on a year-over-year basis just before or as we enter a recession. However, it is also somewhat prone to giving false signals, hence the old joke about the market forecasting nine of the last five recessions.

Keep in mind that even if we entered a recession today, it will be about six months before it is officially declared. As of January 11, the S&P 500 is now down 1.67% year over year. In and of itself that is suggestive, not definitive. It could just be a mid-cycle slowdown like we had in the mid-nineties and the early eighties, which were two of the four previous false signals. The crash of 1987 and the rising inflation of the late 1970's were the other two.

Again, we suggest overweighting your portfolio in stable demand companies like Campbell's (NYSE: CPB) and Kraft (NYSE: KFT) for canned goods. Aerospace and Defense companies are going to be driven by the need to rebuild the nation's arsenal which is worn out from the wars in Iraq and Afghanistan, not by changes in consumer demand or even business investment spending. Therefore, companies like Northrop Grumman (NYSE: NOC) and L-3 Communications (NYSE: LLL) deserve serious consideration.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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