Montreal, Canada

In the absence of government fiscal spending since 2009 we'd probably be looking at massive bank closures, business bankruptcies and insolvencies at the state and municipal level.

The global economy is nearing the nadir of this government fuel-injected spending binge and companies must witness revenue growth to legitimize corporate earnings and rising stock values. Cost-cutting is yesterday's news; now companies need to show investors "the money."

The poor, unsuspecting investment public has been sold on a strong economic recovery in 2010. Nothing, however, could be further from the truth in a protracted environment of widespread deficits at the private and public level, ongoing asset deflation in stocks and real estate and a decline in real wages. In short, I'd coin this recovery a fraud.

Over the last two weeks, I've urged investors to sell stocks or lighten-up. The risks in stocks, commodities and other high-risk assets will only intensify this summer before markets once again post another in a series of short-lived rallies this fall. After falling about 16% from peak-to-trough, the S&P 500 Index has posted a strong rally since last week – up more than 7.5%.

I urge you to sell stocks in this brief rally because spectacular macroeconomic risks will continue to pose serious headwinds for investors. The eurozone crisis isn't over; the housing debacle continues in the United States; companies aren't hiring; inflation across most industries is falling sharply as companies lose pricing power and China is slowing markedly since the first quarter. Austerity is now the buzzword in 2010 and that won't boost domestic consumption or economic growth. Au contraire, we're heading down Japan's morbid path of near zero growth and accelerated disinflation or outright deflation.

Worse, government financial regulation is on the way as Obama continues to wage war on Big Business. FDR went on the same path in the 1930s and lost that battle. Obama will lose this one. And along with new government regulation – never a bullish development – the stock market will vote with both thumbs down. That's exactly what happened starting in 1937 following FDR's assault on business and new government regulations; stocks swooned.

And as for small business, responsible for more than 50% of new jobs growth, this administration is out to lunch. Small businesses still can't obtain the financing they need. Only the big banks have the cash and they're mostly hoarding it.

By the time we hit 2011, I expect another wicked bear market to inflict the final cut as it pertains to the post-2008 credit crisis and its peripheral victims. There's almost nothing positive about the outlook heading into the second half of 2010 and as we head into 2011, I think high quality bonds, gold, the dollar and the yen will once again dominate asset markets as just about everything else crashes again. We're heading down the wrong path. Investors beware.