UK Growth Hits 16-yr Low

The Asian markets were sharply lower overnight, with Japan down as much as 9%, as concerns about the global recession and a continued unwinding of the carry trade continues. The Yen is up a whopping +4% today. Our futures were down sharply before the open.

The UK said that GDP there contracted -0.5% last quarter, the lowest rate in 16 years. But the fact that the UK is slipping into recession isn't all that surprising given what is taking place around the globe.

Oil is trading down below $65, despite OPEC announcing a big cut in production in an attempt to support prices. The dollar is also higher again today, weighing on commodities. Gold is hovering around $700.

PNC Financial announced it will acquire National City (NCC), which is good news. We need more consolidation in the banking sector. Treasury Sec. Paulson is preparing to take more stakes in a number of regional banks, and will likely push for more mergers.

Existing home sales rose +5.5% in September, the highest level in more than a year. Prices are down -9% overall, but it appears there are some early signs of stabilization in the housing market. This would go a long way to helping stabilize the credit markets, and then the stock market.

It was another panicky open, with the fear index, the VIX, spiking more than +20% to 89. It has since fallen back to 77, but we need to see this uptrend in the VIX broken.

The S&P 500 has not broken below its lows from October 10th. The Fed meets next week and will cut rates, although another coordinated rate cut could even come before then. I don't know what sparks it, but it feels like the rubber band is getting pulled back so far in the market that we could see another +10% spike at some point. Just saying.