The 'Green Shoots' Wither

[Excerpted from Bill Cara's Daily Report]

Monday was an ugly day for the Bulls. Today will start off much better.

Following the publication of a very negative economic outlook report from the World Bank, traders took their eyes off ‘green shoots’ and prices popped up red across the board Monday morning. By the bell, the DJIA (8,339.01 -200.72 -2.35%), S&P 500 (893.04 -28.19 -3.06%), and the NASDAQ (1,766.19 -61.28 -3.35%) were crunched. As if the selling during the day was not bad enough, trader punctuated the session by selling at the close that took the indexes to their lows of the day.

The World Bank report, by the way, projected lower commodity prices in the face of lessened global demand. Consequentially, the Toronto Composite (9,834.18 -453.77 -4.41%) and Toronto Venture Board (1,078.66 -40.14 -3.59%) traded even lower than NY.

Earlier in the day Monday, Austral-Asian markets were smashed as well. Japan’s Nikkei 225 (9,549.6 -2.82%), Hong Kong (17,538.4 -2.89%), Aussie All Ordinaries (3,793.0 -3.01%) were much lower, although Shanghai (2,880.5 +0.93%), and India’s BSE 30 (14,521.9 +1.80%) were seemingly unaffected.

Later on the European equity bourses, prices are actually fairly strong, probably pushed higher by Interventionists who are concerned that a price break here could set off a flood. The French CAC (3,135.3 8:15AM ET +0.38%), German DAX (4,725.3 8:00AM ET +0.68%) and UK FTSE 100 (4,247.1 8:00AM ET +0.31%) were up, but tentatively so.

In US trading Monday, all sectors and industries were down. For the Cara 100 stocks, 98 were down and 25 of them dropped at least -6.4% on the day. Wal-Mart (WMT +0.9%) and Kookmin Bank (KB +0.1%) were the only winners.

The worst hit sectors were Financials (XLF -5.8%), Basic Materials (XLB -5.1%), and Energy (XLE -5.0%).

The leading industry groups on the downside were Goldminers ($XAU -7.5%), Oil Services ($IOSX -6.8%) and Banks ($BKX -6.6%).

Cara 100s that lost the most were Russia’s Vimpel-Communications (VIP -12.9%), Canada’s miner Teck Corp (TCK -11.9%), Peruvian goldminer Buenaventura (BVN -9.2%), and Germany’s Deutsche Bank (DB -9.2%). Clearly, a global pull-back.

The $USD was stronger against all the major currencies except the Yen Monday (80.77 +0.46 +0.57%). The Yen (104.30 +0.44 +0.42%) was very strong against a strong dollar, which is when the price of gold and oil pulls back the most, and it did yesterday. The Cdn Dollar (86.64 -1.47 -1.67%), the Euro (138.57 -0.76 -0.55%), and British Pound (163.40 -1.45 -0.88%) were weak against the Dollar.

In US bond market trading, the US Treasuries followed up the gain on Friday with another gain. Starting Tuesday, for three days, the US Treasury must sell over $100 billion in 2-, 5- and 7-year notes. Monday, the US long Bond gained a tad ($USB 116.36 +0.36 +0.31%). The yields for 30-year (4.429 -0.93 -2.06%), 10-year (3.693 -0.96 -2.53%), and 5-year (2.709 -0.95 -3.39%) pulled back a bit further from last Thursday’s strong gains. Treasury bill yields lifted a bit to 0.185, as traders sold some in order to raise cash to buy the longer-term notes this week.

$GOLD suffered a big loss on the day (922.90 -11.60 -1.24%).

The loss in Crude Oil (67.17 -2.85 -4.07%) was even bigger, undoubtedly because the World Bank had opined early in the day in a major report that they see even less demand for consumables like oil in an economic recession that may become worse than anticipated.

The Euro was weaker yesterday (138.57 -0.76 -0.55%), but climbing back this morning (1.4001 +0.0139 +1.00% 08:51am ET).

That has helped higher futures prices for gold and also oil (68.14 +0.64 +0.95% 08:51am ET).

Spot gold, palladium, platinum and silver are presently stronger at: 922.52 +7.50 +0.82% 09:05am ET; 232.5 +0.5 +0.22% 09:05am; 1166.0 +5.0 +0.43% 09:03; and 13.8025 +0.1425 +1.04% 09:05am, respectively, with silver leading the move higher.

US equity futures for the DJIA higher this morning (8318 +35 +0.42% 08:51am ET), indicating a stronger open.