The big discussion today revolves around the continuing route in commodity stocks...the decline is so steep and severe that it is fueling theories that a liquidation is occurring due to: 1) another commodity firm going out of business (most likely), 2) prime brokers telling clients they don't want them in commodities, or 3) firms that lend in the commodity markets pulling back.
Just look at the last two days: Freeport McMorandown 11 percent, Potash down 11 percent, U.S. Steel down 11 percent, Barrick Gold down 9 percent.
And that's just metals and agriculture. In energy, Arch Coaldown almost 25 percent, Foundation Coaldown 16 percent, Bucyrus and Joy Global(mining equipment) both down about 25 percent.
Oil service stocks are getting clobbered as well: Weatherford down 11 percent, National Oilwell Varco down 15 percent, Nobledown 9 percent, Tidewater down 8 percent.
Folks, that seems like a lot more than demand destruction to me.
In the middle of this, oil services giant Schlumberger said that it expects North American natural gas drilling to stay strong through 2009. The reaction? Stock goes from $86 to $87, still down 3 percent. Strange.
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