Things Look Bleak Or So It Seems

So much topsy turvy action on the exchanges. The DJIA continues to fall. The economist seem to be running around like chickens with their heads cut off. The dollar is slowly gaining strength in the market, ok maybe not so slowly. In the last few months it has gained more than 20% against the Euro. Even gold is falling. Things look bleak.

One thing that does interest me is the fact that commodity prices are down significantly since April and May. Oil is down by nearly 70%, rice is down almost 50%, the list goes on and on. After such a huge runup in commodity prices, the floor fell out from underneath them. This means that deflation could be on the horizon, and with consumer prices down 1% (core prices down 0.1%) in October, the case for deflation is just as valid as the case was for stagflation in April.

I wish I had some advice to give, but right now I am out of advice.

Tags: declining prices, deflation, stagflation