After the long weekend, North American indices tried to hold on to their gains, but the task appeared daunting amid an outbreak of depressing economic data. The latest punch was delivered by the weak consumer spending numbers. More and more, this reminds us of the bear market of the early 90s, when the S&P500 declined 20% and, for the next while, investors had to contend with grinding against bottom levels, with the risk of continuing declines.

What has kept markets' heads above water so far in February has been speculation concerning new investments in the ailing financial sector, banks' potentially increasing their dividends, and sovereign investment funds bringing new capital. Good news also came from the labor market, which managed to hold its own, unlike previous recessions when it would simply crumble under pressure.

So, last week, Canada’s benchmark S&P/TSX gained 8.9% above its January lows, while the DJIA managed to squeeze out a gain of about three percent. Also, yesterday's North American markets started out in positive territory again, while on Monday, European markets ended up with solid gains; with London's FTSE100 gaining 2.75%, Germany's DAX increasing by two percent, and Paris' CAC adding 1.9%.

In Asia, Japan recently gained 12.84% above its January lows; however, observers of this particular market are far from calling for the "all clear." Hong Kong was up 6.8% last week, only to give back 1.6% on Monday on fears that monetary policy in China may keep on tightening.

If only bleak economic data would stop coming out. Last week, the Federal Reserve Chair, Ben Bernanke, said that "business prospects have worsened" and that "the economy will grow at a sluggish pace before recovering later in the year," while "banks' mortgage investments could lose more value."

So, here we are: there are falling house prices and falling equity portfolios, while energy prices are hitting new highs. True, people still have their jobs and most still have their homes, at least for the time being. But consumer confidence seems to be fundamentally shaken, as evidenced by the latest disappointing numbers.

In addition, next week, the latest inflation data is due in the U.S.; although, at the moment, no one is terribly concerned about it, regardless of more expected interest-rate cuts. Even the voices expressing concern about how inflation and credit are going to be managed after the economy gains solid footing are fewer and fewer; thus acknowledging just how welcome the slashing of interest rates really is.

In other words, the stock market gains we are seeing these past few trading sessions are a welcome reprieve, but only a reprieve, no more, no less. We are far from a recovery and if bad economic data keep pouring in as they have so far, I believe that optimistic recovery timeframes, such as the second half of 2008 for Canada and Q4/2008 for the U.S., will have to be pushed further for both countries.