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Worry Is DEFLATION And GE's Credit Market Woes

Another notably weak market day: 5 to 1 declining to advancing stocks...and a pike in New Lows at the NYSE. Also notable is the magnitude of the point decline: I track about 1,300 stocks...of that, 500 are down 5 percent or more. That is very unusual. What happened?

Yes, there is some anxiety about the bill not passing in the House, but there are even bigger things going on.

First, we had a Trifecta: oil, gold, stocks all down! That is rare.

The worry is DEFLATION, not INFLATION. Even Trichet gets it now.

Look at the Dow Transports down 8.7 percent. Point decline of 399 points....is the largest point decline IN HISTORY for the Transports. In percentage terms, it is the 15th biggest drop. Trucker Con-Waycame out and slashes guidance. Demand for freight services seemed to have dropped notably in September. They are cutting prices to maintain market share. Demand for freight services appears weaker.

Fertilizer demand also appears to be down: Mosaicdisappointed with its earnings report. All the fertilizer stocks are down. The global slowdown trade is also continuing, with many engineering, industrial and material stocks at new lows.

Finally, the OTHER GREAT WORRY is the credit market freeze-up. Our parent company, General Electric, priced a large secondary at $22.25 this morning, largely to deal with its difficulty rolling over short-term commercial paper. If GE is having trouble rolling over paper, this is an issue that needs to be addressed.

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