The market is grappling with a series of macro and individual stock problems today.
--Oil at new highs is the main problem, but the slow drop in the dollar (at the lows for the month, and reversing much of the gains from its bottom in April) is a particular aggravating factor;
--Core PPI higher than expected has the inflation hawks out;
--Cautious retail commentary two days in a row.
The retail issues are not surprising; we heard Lowe's talking cautiously yesterday, now Home Depot is guiding toward the low end of its previous guidance. The Saks CEO got a chuckle on trading desks this morning by saying that the consumer is acting as if there's a recession, whether there is one or not.
Bottom line: the retail turnaround is less certain, and further out.
Financials are also weak today:
--Fannie Mae officials, speaking at their annual meeting, saying home prices could fall as much as 25% from their highs, and even though they are short-term winners int he housing bill they are clearly taking on more risks;
--AIG hitting 10 year lows as executives there say they are looking to shed non-core assets;
--Oppenheimer's Meredith Whitney again trash-talking financials, saying the credit crisis will extend into 2009,
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