November 4, 2008

Global Market Comments for November 4, 2008

1) It all comes down to the Senate today. If the Democrats win 60 seats they will have a supermajority that will give Obama a blank check. Less than that, the republicans can fight a bitter rear guard action with a filibuster. Our first read will come with the early results from battleground state Virginia that closes its polls 7:00 PM East coast time.

2) General Motors car sales dropped 45% in October YOY, the worst performance since WWII. Ford was down 30% and Toyota was down 23%. You know things are tough when even the Japanese can't sell cars. I drive over the Benicia Bridge once a week where cars imported from Japan are offloaded. The stockpile of cars there has doubled in the past month. Expect the economic data for October and November to be some of the worst in the economic history of the US. JP Morgan is predicting a decline in GDP of 3%. Next to come, an October non farm payroll on Friday of -200,000!

3) Wall Street has been foreclosed on and has taken a short term rental at 1600 Pennsylvania Avenue, Washington DC 20500, tel: 202-456-1111.

3) More unintended consequences. The price of recycled cardboard has plunged from $200 to only $30/ton since July. Recycling companies are scrambling to find warehouse space to accommodate rapidly spiraling stockpiles. Newspaper has dropped from $150 to $65/ton. Only a few months ago people were stealing newspapers out of my recycling bin.