European Markets Are Down A Seventh Consecutive Day

Current Futures: Dow -80.00, S&P -10.80, NASDAQ -26.50
 
European Trade: Despite surging higher in the first minutes of trading, and expecting a rate cut from the ECB, European stocks are now heading lower. This is the seventh consecutive day of declines seen in Europe. Also tonight, Asian stocks tumbled almost 5%, after a report in Japan showed that machine orders fell the most on record. U.S. futures are also pointing to a negative start on Wall Street. 

It now looks like investors are again focusing upon the real economy. However, this time things appear a little different. The major central banks are near the limit of monetary policy, while the stock market has probably valued in every stimulus plan the Government might come with. Still, the latest reports point to a marketable deterioration on the world’s outlook.

In the last 2 days, Mr. Bernanke had to rename “quantitative easing” into “credit easing”, saying that the Fed would focus on its assets side, rather than on the liability side, the same as the BoJ did. However, the asset side is equal with the liability side on the Fed’s balance sheets, so instead of the Chairman presenting something new, we are playing a semantic game. Also coming from the Fed, the latest report of the Beige Book confirms that things in the financial sector may get worse going forward.

Tonight, the Nikkei fell 415.15 points (4.92%) to 8,023.31. The Australian S&P/Asx lost 157.50 points (4.27%) to 3,529.50. The U.K. Ftse tumbled 70.33 points (1.68%) to 4,110.31, while the German Dax loss 72.89 points (1.65%) to 4,349.46.

Crude oil is trading near the $36 area again, after oil supply reached a 16-month high. Crude oil for February delivery fell $0.80 to $36.40.

Gold moved very little in the Asian session. Bullion for immediate delivery rose $0.60 to $809.40.

Previous Asian trade: Following the very weak retail sales report, equity markets around the world are surrounded by red. The U.S. markets posted tonight the biggest decline from the last period, while the Asian stocks fell to the lowest value seen in the last 5 weeks. 
There were two key reports tonight that might have made the bulls change camps. The U.S. retail report showed that sales fell for six consecutive months in December, making it the worst Holiday season in the last four decades. Retail sales were forecasted to fall by 1.2%, instead of the printed 2.7%.

Also tonight, a report showed that machine orders plunged in Japan by 16.2% in November, the most on record. A huge decline in machine orders is detrimental to a country where the whole economy is based on technology exports. The report shows that the Japanese corporate environment cuts back on its spending, which also does not help the economy.