CAPITULATION

 
They say look for signs of capitulation.

They also say there are no signs of inflation as far as one can see. Most commodity sectors are weaker than a new born kitten. Concerns about anemic demand appear to grow daily. Higher interest  rates supposedly bode well for some sectors like banks and building materials and metals and mining.

The other side of that coin is companies that lend credit to keep their businesses afloat like the auto industry and certain retailers. A stronger dollar goes along with higher interest rates and so does a bigger trade deficit. Prices of  U.S. imports for October reportedly fell 0.5%, the fourth straight dip while prices of U.S.-made stuff exported to other countries declined 0.2% in October.

For the mathematically challenged that's a -0.3% shortfall. Think about it this way, just for kicks. A 0.1% increased in jobs is apparently large enough to make the  trigger-shy, Yellen-led Fed pull the trigger. When in doubt the usual ploy is like those usual suspects: Feed the big dog.

Higher interest rates and a stronger dollar will feed the safe harbor perception on the buck and likely drive it higher when feathers get ruffled in a global world where ruffled feathers are as certain as politicians who look you in eye and lie. In past few months if you've been paying attention several firms have closed or curtailed their emerging market exposure. A lot of that has to do with the crumpling commodity markets. For many EMs commodities is the name of the game.

Today comes news that Goldman Sachs, you remember them from their close ties to the Federal Reserve Bank, "closed its BRIC fund after years of poor returns, the latest sign of how falling commodity prices and weak global demand growth have upended long-held investment strategies," according to the Wall Street Journal.

Apparently, Goldman moved the funds into larger-emerging markets fare, abandoning for now once Wall Street darlings of the future, Brazil, Russia, India and China, the Journal noted. It was Goldman back in 2006 that coined the term BRICs fund. Citing another source, the Journal says, "Retail and institutional assets in commodity investments in the third quarter are down more than 50% from their 2011 peak."

We don't know if this is capitalization and we are well aware of so-called value traps. But if we had to guess, given all that we read, that door is well ajar.