With December upon us one might expect it to be a month of "distribution" by hedge funds and mutual funds. That is, a parring of big positions by bleeding them out into rallies, raising more cash in preparation for end of year redemptions. Looking at commodity returns since highs made this summer, we can see the same is happening in that space:

Returns since highs made in summer:

Soybeans:      -50%

Wheat:          -50%

Corn:             -60%

Copper:          -64%

Gold:             -23%

Crude:           -70%

Dollar index:        +24%

Ten Year Note:    +13%

S&P 500 Index:    -40%

With over 1.5 million jobs lost since summer, one can hardly say that this recession has hit bottom. If things go well we could bottom as early as sometime in 2009.  Some are saying that quarter four GDP could be as weak as a -8% number. Based on the data that seems reasonable as the economy has essentially shut down but still, most are predicting something closer to -4% and then -1.5% in the first quarter of 2009.  If mortgage rates get to 4.75% in the first quarter of 2009, then we might see a real slowing in the rate of foreclosures and be able to see the light at the end of the housing collapse.....Obama seems ready to really focus on this issue so I suspect home prices will bottom in 2009, down some 40-50% from bubble highs set in the 2005-2006 time frame.  Calls for crude oil to go to $25/bbl seem extreme but nobody in america would complain about it as that would drive gasoline down to $1.00/gallon. We heard a lot about how bad deflationary spirals are, and now we know.....the speed of this thing is what scares me......the world has gotten a 50% haircut in 6 months.