Probably not. The odds of a recession during the next 12 months have increased as the housing slump deepens and the credit crisis continues. But there is sharp disagreement over the likelihood of a contraction, with some arguing it is all but inevitable and others insisting the economy will skirt a downturn. Economists in the latest Wall Street Journal survey put the risk of a recession at 36%, up from 28% a month earlier. There was a wide range of opinions, of course, but the range highlights an intense argument over whether the housing and financial problems will infect the broader economy. Something tells me that hundreds of thousands in the mortgage field aren’t out shopping for new jet skis or snow mobiles…

In a communication yesterday, Chase has decided to eliminate the No Doc and No Ratio programs from their Alt-A product suite effective September 19th due to “the lending environment”.

Indymac announced that they are consolidating all 3 correspondent operations to one in Scottsdale, Arizona.

The fourth largest lender (Northern Rock) in England is being “bailed out” by the Bank of England due to subprime lending issues.

In spite of losing half its value this year, Countrywide’s stock rose yesterday after the company said it has $12 billion in borrowing capacity through new and existing credit lines. Last month CW borrowed $11.5 billion from bank credit lines and accelerated a plan to fund mortgages through its thrift unit. Their lending last month totaled $34 billion and their applications fell 12 percent from August 2006, the company said in the statement. About $52 billion of applications were being processed as of Aug. 31, a 19% drop, versus a 2.6% increase in applications nationwide during August, according to the Mortgage Bankers Association.

With a population of nearly 300,000, Stockton has acquired the unfortunate distinction of having the highest foreclosure rate of any US city, with one in 27 households, according to Realtytrac.

Back to economy… this morning we had the release of August’s Retail Sales report. Giving us a measurement of consumer spending, it was +.3%, but ex-autos it was -.4%, a tad weaker than expected.  Later this morning we’ll have Industrial Production & Capacity Utilization for August. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities, and is expected +0.3%. Lastly today we the University of Michigan’s Consumer Sentiment Index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. It is expected at 83.4, down (“less confident”) slightly from August’s 1-yr low number of 83.5. After Retail Sales the 10-yr is at 4.44% and A-paper mortgages have improved slightly.

Traders and investors are speculating that the Fed will cut its target rate for overnight loans to 4.75 percent from 5.25 percent when it meets on Tuesday. There's a 53% chance of a half-point cut next week, compared with a 36% chance of a quarter-point reduction, prices indicate. The next meeting after Tuesday’s will be on Halloween, and then again on December 11th, and the odds say that we’ll be at 4.25% after that meeting. 

How to Tell the Sex of a Fly:
A woman walked into the kitchen to find her husband stalking around with a fly swatter.

"What are you doing?" she asked.
"Hunting flies," he responded.
"Oh. Killing any?" she asked.
"Yep, 3 males, 2 females," he replied.
Intrigued, she asked, "How can you tell them apart?"
He responded, "3 were on a beer can, 2 were on the phone."