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Watching Commodities and Citi Stock

The good news this week is that lower commodities have taken the pressure off consumers — oil is down about 12 percent, gasoline about 8 percent. That should show up in lower prices at the bottom in a matter of weeks.

The bad news is that commodities are lower because traders are coming to believe that growth in the U.S. — and perhaps elsewhere as well — will be lower than expected.

Another issue: the sudden strength in the dollar, which makes U.S. exports more expensive, are hurting traders who had been betting that the dollar would remain weak, and commodities would remain strong.

But the declines in stocks this week have been mostly confined to commodity stocks.

Sectors this week:

Energy down 6.9%

Materials down 3.8%

Healthcare up 0.6%

Consumer staples flat

Consumer discretionary down 0.7%

The S&P 500hit a multiyear high on Monday — and closed Friday less than 2 percent from that high.

If this is end of global end of growth, it's ending on a fairly quiet note.

Elsewhere, worried about the low volume? It's going to get lower. On Monday morning, Citigroup will split 1 for 10, ending a subculture of trading activity whereby small groups of traders have been trading Citi's low priced stock to collect a rebate.

The trade works because traders who don't necessarily make a profit playing the spread in Citi's stock can make a profit collecting a rebate, which is given on a per share basis, so the more shares you trade, the more you collect.

Citi was a volume monster: at its peak in 2009 and 2010, it was routinely trading 500 million shares a day...that's about 10 percent of the consolidated trading of the entire NYSE.

Ten percent of all the NYSE trading was Citi stock. Think about that.

That will now go away. What will the trading activity be now? Trading activity has dropped everywhere, so Citi now trades about 350 million shares a day...estimates vary, but I'm fairly confident trading will go to 35 to perhaps 70 million shares a day.

That means consolidated trading at the NYSE will go from, say, 4.2 billion shares a day...to 3.8 to 3.9 billion.

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