From Pragmatic Capitalism:

In this week's investment update, John Hussman discussed the ongoing euro crisis and the ensuing bank crisis. More interestingly, though, he touched on the fact that equities have become so enticed by the euro crisis, they're ignoring the other risks in the market. Most notably, Hussman believes leading indicators continue to point to recession:

"I continue to view economic evidence as consistent with oncoming recession. While there was some enthusiasm over the pop in the Philly Fed index to 8.7%, it's useful to remember that the Philly Fed index also popped from negative levels in August 2007 to 8.6% in November 2007 (the month our Recession Warning Composite turned negative and the economy went into recession).

Meanwhile, the Conference Board's index of leading indicators places nearly half of its weight on the yield curve and M2, which reduces its robustness compared with broader methods. The slight positive reading last month was driven by those monetary components. As Babson Capital has noted, the non-monetary components of the LEI have historically had a 94% correlation with the index, with much more noise from the monetary components.

In fact, in recent years, the...

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