This Market is so Ugly That if I had a Dog That Ugly I'd Shave His . . .

Well that toe I stuck back in the water last week got bitten off. Which just goes to show you, don't go sticking toes into shark infested waters. Man that hurts. The S&P is now poised for its worst annual drop EVER! And Calculated Risk is saying this is the most severe market crash since the Great Depression (as I mentioned yesterday, however, we have fallen further faster this time than the Great Depression). Oh well, it's just money. So what caused today's turmoil? Let me make a few guesses.

Unemployment Posting Big Numbers

Initial jobless claims climb a good bit more than forecast to 542,000 in the week ending November 15th. That brings us to a 26 year high (other than one blip in 1992). That is a good bit higher than the previous week's 516,000.

http://www.bloomberg.com/apps/news?pid=20601087&sid=anVS4Mooik1I&refer=home

And with more layoff announcements daily (JP Morgan laying off about 3000 announced today), this will get worse before it gets better.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aM0sF63PMJN0&refer=home

Fortunately Congress approved a $6 billion jobless benefits extension that Bush is expected to sign.

Prince Alwaleed bin Talal Ain't Got No MoJo

The Prince announced he was raising his stake in Citigroup today from 4% to 5%, which is 54 million shares. Obviously, that had a significant impact on the stock today - NOT! Or perhaps it did. Stock was down 26% today, putting it down over 90% from where it was at the beginning of 2007. Mind you Alwaleed invested heavily into Citigroup's predecessor when it was on the brink of bankruptcy, back in 1991, and that helped make him at one point the fifth richest man on earth, but that was back when Citigroup, his largest holding, was trading over $50 a share. Today it closed under $5.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a3pNjAm3wGxM&refer=home

CDS Insanity

CDS rates are setting new records, showing enhanced concern over corporate defaults. What happens when concern goes up over defaults? Credit dries up even further. That slow thaw that started after the $700 billion bailout was announced is pretty much stopped. So what will Ben and Henry do now? Ben will probably cut rates again, but with the rate already down to 1%, that's not going to provide any help to this market. The rate cuts to date have pretty much done nothing.

http://www.nakedcapitalism.com/2008/11/credit-defaults-swaps-peg-corporate.html

Misc.

- Philadelphia Manufacturing Index at its lowest since 1990

- Bay area median prices off over 40%

- Treasury yield to record lows

- VIX back above 80

On The Brighter Side

Oil closed under $49 a barrel, which should lead to gas prices under $1.75 a gallon in certain areas. I filled up yesterday and it was $1.95 here in New Hampshire. We are nonetheless having a colder November than average and there is no relief in sight, so we could see inventories dropping a bit in the U.S., which could slow this dive. It is probably about as low as it will go, but that assumes it maintains a rational level and nothing these days is rational.