US Treasury yields have plunged by -1.7%, -3.2%, -5.4% and -3.1% for the 30-year, 10-year, 5-year and T-Bill to 4.275, 3.310, 2.214, and 1.085 pct respectively.

At 12:30pm the major North American markets were down to 11799 for the DJIA, 1261 for the S&P 500, 2164.5 for the Nasdaq Composite, and 12882 for the Toronto Composite. In NY, the Healthcare and Cons. Staples sectors were trying to stay above water, but the losers were Financials (XLF -4.1%), Energy (XLE -3.7%) and Basic Materials (XLB -2.9%). The Broker-Dealer index ($XBD) was down -14.9% after just three hours of trading.

Precious metals were falling hard from this morning’s highs (in brackets): gold 1011 (1029), palladium 470 (510.5), platinum 1986 (2118.5) and silver 20.48 (21.35). The problem here is that MF Global, one of the world’s largest derivatives and precious metals traders appears to be in failure crisis as the stock was down -70% in three hours of trading today.

The $USD is stronger, mostly against the Pound and the Loonie. The Euro was strong and so too was the Yen (+2.4% today). So, normally, precious metals would be trading higher, but if a counter party might fail to pay, then traders will sell their positions in fear of capital loss.

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I anticipate the next level down in the DJIA will be 11,200, and that will be the second last plunge in prices. The final one to come sometime later in the year will result in the ultimate panic to a Dow spike bottom of about 10,000. That cleansing process of the sellers will be your opportunity to buy the cycle bottom.

Now is the time to start focusing on where you intend to place your assets at the appropriate time. Where today you should be at a 90-95% cash holding level, at what is likely to be the final blow-off of markets you ought to go 90-95% long securities.

Relax; the market will come to you. One of the reasons is that most global banks have already decided that if the central bankers intend to backstop the credit system at all costs, they will be slow to sell off CDO assets at a discount.

The bottom line is that some financial institutions don’t yet know if they are strong enough to withstand another liquidity crunch. There will be many that cannot. The process of the market grinding down another -5% will encompass the period of negotiation where predator and prey spend time conferencing behind closed boardroom doors. Then, there will come a time where predators will stand back, with the Fed’s agreement, and watch the weakest go under as we saw this weekend with Bear Stearns and possibly today with MF Global, which is down some -72% on the day.

MF Global took over the previously ill-fated Refco Futures. What goes around, comes around. It’s why I questioned the prudence of Bank of America buying Countrywide for so many billions when NOBODY knows the extent of the Countrywide liabilities.

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Links & Charts

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International Economics Review

US Economic Calendar.

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International Equity Markets Review

Europe

Here is the latest session data for the bourses of Europe.

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Here is the latest session data for the London stock exchange FTSE.

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Here is the latest session data for the German DAX.

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Here is the latest session data for the French CAC 40.

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Here is the latest session data for the Milan Italy stock exchange MIBTEL.

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Here is the latest session data for the Swiss market index.

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Asia-Pacific

Here is the latest session data for the Asia-Pacific stock exchanges.

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Here is the latest chart for the Japanese Nikkei 225 index.

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Here is the latest chart for the Singapore index .

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Here is the latest chart for the Shanghai Composite index .

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Here is the latest chart for the Hong Kong Hang Seng index .

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Here is the latest chart for the India BSE 30 index .

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Here is the latest chart for the Australian All Ordinaries index .

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US Equity Markets Review

DJIA (interactive) chart

NASDAQ Composite (interactive) chart

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Oil Review

Here is the e-miNY Jan-08 Crude Oil chart.

Interactive Chart of Daily Crude Oil:

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Gold & Precious Metals Review

Spot gold chart for the week

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Spot silver chart for the week

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Forex Review

Here is the chart of the week's trading in the $USD.

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ADDENDUM 2:20PM

My choice to replace Lehman Bros (LEH) in the Cara Global Best 100 Companies is Syngenta AG ADS (NYSE:SYT). This is a Swiss company in the Basic Materials sector (GICS=15101030), which produces fertilizers and agricultural chemicals. This is a mid-size company that is growing its revenue quickly and has a Return On Equity of about +19%. Credit Suisse upgraded the stock on March-05 to Outperform. If I have the time, I hope to do a Cara Briefing report soon, however, that task has a low priority for now.

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