Billmon: Fuel Shortage

For the financial markets, last week had a ugly feel to it, both on Wall Street and globally. It wasn't a crash, certainly, but also more than just a garden-variety correction. It felt like the preliminary stages of a sea change in sentiment -- the kind that either accompanies the popping of a bubble, or causes it, depending on your economic point of view.

The Dow dropped 420 fast points in the final three days of the week, interrupted by nothing that could be called a significant countertrend rally. This despite positive earnings surprises from both GE and Citigroup.

When the market ignores good news from those two, it's essentially a storm flag for the entire economy, since between them you have a pretty good proxy for GDP, particularly now that shuffling electrons with dollar signs attached to them has become such a big part of the U.S. economy. While first quarter earnings may yet be OK, the market is looking further ahead -- and seeing a sharp slowdown in both sales and profits.