Wednesday Market Roundup: CPI Has Largest Slide Since 1947

Tuesday, I mentioned how the PPI was showing signs of deflation. On Wednesday the CPI backed up that notion. October CPI fell -1.0%, which somehow is the largest drop in decades. Moreover, the owner's equivalent rent component was flat yr/yr, which seems silly. So the real change in consumer prices was likely more pronounced than the headline figure suggests.

The Big Three auto companies testified before the Senate in an attempt to secure government loans. It is a sad state of affairs for those companies, and painful to watch. I am torn where I fall on the debate - I don't want to see good money thrown after bad, but the economy certainly doesn't need them to go bankrupt right now.

Citigroup (C) is liquidating a hedge fund which managed $4.2 billion at its peak, but has lost -53% of its value. Bloomberg.com had an interesting story on how much cash has already been raised by the big hedge funds (more on this later). Let's hope they're done selling.

Asian markets were lower overnight. The Yen was slightly lower Wednesday. Oil was flattish near $54.25. The 10-year yield was lower again, hitting 3.45%, highlighting growing concern with deflation, not inflation.

The VIX was up +2% to 69. And the put/call ratio opened at an incredibly high 1.99.

Comments

[carey_jim:]

It's time America wakes up to history the the world around us or we will be buried by them.

Japan built its automobile industry with tariffs. TARIFFS. T A R I F F S. Tariffs. Mercantilism.

American cars are too expensive for Japanese buyers because of huge tariffs which have been in place for years (not to speak of a vastly undervalued yen vs the dollar complements of the Japanese government.)

And the Japanese culture forbids Japanese from buying American cars anyway.

Only Japanese gangsters and a few Japanese millionaires and eccentrics drive American cars and, predictably, gangsters are the only Japanese who drive Harley Davidson motorcycles.

When are we Americans going to wake up and discover history and the world around us?

2008 Nov 21 01:37 AM