Commodities Decline While Airlines and Financials Look Up

The commodity decline that began a month ago and accelerated yesterday is, with the exception of copper, continuing this morning; traders are worried about the muted reaction from the stock market and are hopeful we will get a better reaction today.

Bears, of course, say this is a sign that slowing global growth is finally starting to show up in the psyche of commodity traders. This is a real issue for many of the stocks in the S&P 500: remember nearly 50 percent of total revenues from the S&P 500 is now overseas, so there are plenty of people wondering about how much more upside there can be in growth stocks in particular.

The dollar index is on the verge of breaking out to a 6-month high.

The Fed meeting today is a real tossup: they will certainly not change rates, but it is an opportunity to discuss growth concerns and perhaps less on inflation.


1) Societe Generale is helping the mood in Europe. There were continuing losses on credit derivatives, but much of the subprime issues seem to be behind them. Retail banking was strong. Most financials in Europe are trading up, most financials are up pre-open in the U.S.

2) Airlines are trading up this morning on lower oil; Delta and Continental up 4 percent each. United Airsaid after the bell yesterday that traffic was down 4 percent in July, American said traffic was down 3.5 percent.

3) P&G delivered earnings ahead of estimates, and ahead of the company's own estimates. Tighter cost controls and price increases were a major factor in the beat. Topline growth of 10.3 percent was also ahead of most expectations. 2009 guidance of $3.80-$3.87 is a bit wider than prior guidance of $3.80-$3.85; the company also reduced their guidance for organic volume growth to 2-3 percent (from 3-5 percent previously).

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