The End of Wall Street?

DOW plummets below 8,000, a leve it hasn't seen in almost 2 years of bubble-built bullishness and over exuberance. 

What to do? Consumer confidence is in shambles, yet the discrepancy and demand in precious metal remains flat if not treading lower. What seemed like inflationary forces coming to play is seemingly transforming to a wave of global deflation where demand is falling along with prices.

Towards market closing we see DOW rebounding back to around 8,500. Referring to my previous posts about the VIX^ (index pictured above), I think it's fair to say volatility is literally through the roof - see how fast it jumped in the last 3 months?

While CIBC's Head Economist Jeff Rubin continues on his outlandish claims of market bottoming this week (keep in mind this man said oil $200 by 2008 and misses on most of his other calls...) the TSX drops further so far this week. In fact yesterday it dropped another 5%.

Thus its with incredible skepticism that most should read his latest claims... 

CIBC World Markets chief economist Jeffrey Rubin has a new theory about what really sunk the world economy – high oil prices.

CIBC's Rubin blames high oil prices for economy's nosedive

In a report to clients Monday, Mr. Rubin argues high oil prices don't seem to get enough blame for the current mess, even though they were the trigger in four of the past five global recessions.

The latest run-up in oil was so huge, with real oil prices rising 500%, Mr. Rubin said they had a far bigger impact on the economy than the financial crisis.

"The run-up in real oil prices this cycle is over twice the spike in oil prices that occurred during the first or second OPEC oil shock. And those oil shocks produced two of the deepest recessions in the entire post-war period, including the 1980-82 double dip," Mr. Rubin said.

But... has he taken a look at oil price lately? Sure the energy costs were tremendous, but it was all built in to higher labor, service revenues from various contractors, and passed down to the consumers. Can OPEC really blame people not wanting to drive at $150/barrel?  

Oil Prices Drop to 20-Month Low 

Oil prices fell to their lowest level in 20 months on Tuesday, despite efforts by the OPEC cartel to stem the slide, as weak economic growth continued to reduce consumption around the world.

Lower energy prices are providing some welcome relief for struggling consumers, but a 59 percent decline in oil prices since their summer peak also shows how radically the prospects of the global economy have darkened in recent months.

At an emergency meeting last month, members of the Organization of the Petroleum Exporting Countries agreed to reduce their output, as of Nov. 1, to slow the price slide.

While there is no official tally of OPEC production, several members — including Algeria, Qatar, the United Arab Emirates and Kuwait — have signaled in recent days that they had begun paring their production.

As I am writing this, another famous mid-cap Canadian miner is taking a beating from the market -  Teck Cominco (TCK.to)

Specializing in Zinc and other base metals - the recent acquisition of Fording at the worst possible time has really hit Teck hard. Dropping from $50/shares+ to trading today at $5.9x, it remains an incredible bargain - with the huge worry of the $7 billion financing required coming up in a year. Just goes to show how important cash perception is for a company - especially when your core business commodity - zinc drops to $0.50!