Mortimer Zuckerman, co-founder of Boston Properties Inc. (NYSE:BXP), the largest U.S. office real estate investment trust, said the U.S. economy is in a recession and there's no sign of a recovery.

"We are looking at the worst set of macroeconomic conditions since the Great Depression," Zuckerman said in an interview with Bloomberg Television.

Yesterday, the dollar fell to a new record low. It was down to $1.55 against the euro (EUR).

Oil rose to hit the $110 market…then backed off slightly. The commodities index rose three points and bonds edged higher.

As you recall, we didn't like the action on Wall Street on Tuesday. Following the announcement of Ben Bernanke's plan to feed an additional $200 billion into the banking system, stocks rose strongly. Gold rose only modestly. We thought it should be the other way around.

And now, something else worries us: investment advisors have turned bearish, in a big way. All over the world, they've come to think stock market prices will fall. Only in Brazil do they expect prices to go up.

Oddly, the U.S. stock market is one of the world's best performers so far this year, which is to say, it is down less than most. The S&P has lost only 7%. India, Hong Kong and Shanghai are down more than twice as much.

The pros are almost always wrong; when they are bearish, it usually means stocks will rise.

Yesterday, U.S. stocks lost a little. Gold gained a little - plus $4.50…to close over $980. Nothing was decided.

It is tempting to look at this market and come to a simple conclusion: the economy is declining…the feds are trying to stop the decline with more cash and credit. Therefore, the dollar must go down and gold and commodities must go up. That is our basic view of things; it's why we stick with our formula - sell stocks on rallies, buy gold on weakness.

But it's not going to be a smooth ride. Commodities are notoriously cyclical - based on short-term supply and demand considerations - whereas cycles in the credit market are extremely long-term. Bond yields have been falling since 1981 - 27 years. They seem to us to have bottomed out, but it may be a long, long time before the 10-year Government Bond yields 15% again. Selling U.S. bonds may the best thing you can do for the long run…but in the short run, you could regret it, as people may rush into U.S. bonds - the world's safest credit, in dollar terms - as a way of avoiding the risk in the credit market.

Yesterday, the Financial Times told us that three more hedge funds were in trouble. Global Opportunities halted redemptions. Drake Management said it was shutting down one of its funds. And Blue River will close down after losses of more than 80%.

And here, we pause a moment…what went wrong, we wonder? One of the funds to go belly up was called "Absolute Return and Low Volatility." Gee…what could go wrong with that? But apparently, the absolute return went negative…and the volatility got out of control. How could that happen? Aren't these people supposed to be whiz kids? Can't they do projections of volatility and expected rates of return? Isn't the whole point of a hedge fund to HEDGE against these extraordinary losses?

In addition to the normal sturm and drang of markets, we are witnessing a fascinating and entertaining morality tale…in which the gods are giving the boot to the entire financial industry. (More about this tomorrow…)

Back to our point… As we write this, gold futures hit $1,000 an ounce before pulling back. Gold at $1,000 will probably seem a bargain sometime in the future, but in the months ahead, it could be a source of irritation. Corn, wheat…and industrial commodities…could be an even bigger disappointment. Supply and demand are always balanced on the sharp fulcrum of prices. Even a slight fall-off in demand, caused by a worldwide slowdown, could have a devastating effect on prices - even though we may be in a commodities super-cycle that will last for many years…and even though the dollar is going down.

In the case of U.S. stocks, it looks to us that they are not a good place for your money - long-term. We would be especially eager to get rid of high fliers, such as Google (NASDAQ:GOOG). But we would also be prepared for a rally in stocks in the weeks ahead.

On the other hand, we have the opposite outlook for stocks in emerging market. The United States now has a hugely disproportionate share of the world's equity value - about a third. Since the rest of the world is growing much faster than the United States and Europe, you could expect equity values in the rest of the world to rise too. So, relatively speaking, emerging markets should do better than the United States or Europe over the long run. Still, stocks in emerging markets could be disasters in the short run.

Where does this leave you? What to do?

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.