Why the selloff? It could be the impasse on healthcare reform and a statement form Fitch that the eurozone contagion is a threat to U.S. banks.
Stocks sold off in the last hour possibly based on the following:
* Super committee Co-Chair Jeb Hensarling's statement that talks have "stalled" over differences in how to reform Medicare and Medicade. Hensarling stated that the Republicans have offered to use the Medicare reform proposals that former Senator Domenici and former Clinton CBO Director Alice Rivlin had put together but that Democrats rejected the offer.
* Fitch's statement that the Eurozone contagion poses a threat to U.S. bank ratings.
In his commentary, Howard attempts to define the notion of what is a "fair share" of the tax burden, defines the magnitude of the problem (i.e., the U.S. government spends more than it takes in), talks about the potential solutions and discusses the philosophical differences between parties on the subject.
All these subjects will likely be part of the public debate in the years to come.
* November NAHB homebuilder sentiment rose to 20 from 17 in October and vs. expectations of 18. This is the highest reading in 15 months.
* The headline October CPI declined by 0.1%. That compares to expectations of no change and +0.3% in September. Core CPI was +0.1% vs. +0.5% last month and was in line with consensus. The three-month annual change in core inflation (+1.8%) has slowed slightly.
* Industrial Production rose by 0.7% vs. consensus at +0.4 % and a September drop of 0.1%. The October print was the best since the summer. Motor vehicle production was particularly strong at +3% (I bought more Ford (F) today.) Generally, the rise was broad-based, which is a good thing, especially since inventory levels are low. With this strong final demand report, the upcoming ISMs should continue to show strength as should durable goods orders.
This means that fourth-quarter 2011 corporate profits should be at least in line with the more optimistic numbers and quite probably exceed projections.
In summary, tame inflation and improving trends in industrial production augur well for S&P profits and the prices for risk assets.
Now all we need is for the European central bankers and leaders to get their act together.