Yesterday, the DJIA (-161.52 -1.47% to 10854.17), S&P 500 (-18.87 -1.56% to 1188.22), and NASDAQ Composite (-25.65 -1.18% to 2153.33) reflected the uncertainty of a deal being struck on the Paulson Plan. In Canada, the Toronto Composite dropped -0.8% to 12532.63; but the Venture Board dropped -2.4% to 1538.6 after gaining +1.7% on Monday.

Earlier today, Asia-Pacific equity markets recovered a bit, encouraged by the fact that Goldman Sachs and Morgan Stanley have each agreed to become Federal Reserve Bank regulated companies with much lower risk levels and also have received much new capital reserves.

The gains across the Board were: Australia All-Ords (+1.02% to 5008.2), Shanghai Composite (+0.70% to 2216.8), Hong Kong Hang Seng (+0.47% to 18962.0), India’s Sensex 30 (+1.17% to 13729.1), and the Japanese Nikkei 225 (+0.20% to 12115.0).

European bourses, at 7:00am ET, are down -0.4% for the French CAC, -0.2% for the German DAX, and -0.4% for the UK FTSE. There is some anxiety today in Europe that the testimony in Washington by US Treasury Secretary Paulson and Fed chairman Bernanke will not give the House of Representatives a chance to vent, like their colleagues in the Senate did yesterday. More histrionics to whip up negative emotions are certain to happen.

Within the industry groups in NY yesterday, the Financials (XLF) dropped just -0.3% and Technology (XLK) were flat. Those were the winners. The losing sectors were Energy (XLE -3.3%), Basic Materials (XLB -2.3%), Healthcare (XLV -2.4%) and Industrials (XLI -2.2%).

Among the stocks of Cara 100 companies, yesterday’s winners were an eclectic group: WFMI (+3.7%), GS (+3.5%), AET (+2.7%) and GSK (+2.4%). The commodity price beneficiaries were the biggest losers: POT (-10.3%), RIO (-9.9%), GGB (-9.6%), VIP (-8.7%), TS (-7.6%), and PBR (-7.5%).

The US long bond ($USB) continues to fall (-0.35%), closing at 117.05. The day before the Lehman bankruptcy, which led to the Financial industry bail-out, the 30-year $USB was trading at 122.55. At the time, I opined it was time to sell. The loss in five sessions is -4.5%, which is huge.

The $USD gained +0.65% to 76.51 and the Euro lost -0.87% to 146.69. The other currencies were down modestly against the USD.

Yesterday, Crude Oil ($WTIC) lost -$0.66/bbl to 108.71. $GOLD futures lost -$17.10/oz to 891.90. As the political storm passes, the USD will likely strengthen and commodity prices fall or relatively underperform again, as the broad market equity prices rally further.

The morning futures (7:30am ET) for Euro, $USD, Crude Oil and DJIA are at: 146.58, 76.80, 109.15, and 10925 (up +95), and gaining strength.

Spot prices at 7:30am (compared to 7:00am in brackets) are for gold 891.26 (888.48), palladium 250.0 (250.0), platinum 1228 (1241), and silver 13.42 (13.36). These markets appear to be closely controlled by the Fed at the moment, but precious metals are rallying.

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Comments & Outlook

Henry Paulson will speak to the Joint Economics Committee in about two hours. Markets remain uncertain. The only certainty in Congress today is the venting these House members are likely to have on behalf of an outraged public. It’s politics as usual, as this is also hard-ball negotiations.

The question is how long Paulson, at his age, can hold up. He is looking rather less the bully he has always been. But, when given the sharp edge yesterday about taxpayers being on the hook and angry, he flashed anger, like a caged animal. Let’s see how he lets Dr. Ron Paul get to him today.

In any case, leaving the repugnant philosophical aspects aside, I think Paulson has a good package that Congress has to rein in with details that permit their continued oversight plus controls over executive pay-outs to management of the financial companies that come to government seeking a bail-out. A quick agreement on a bill is essential.

There are too many market events to list and comment on here. Let me do a couple.

Goldman Sachs has just received a $10 billion capital injection. Morgan Stanley received theirs a day or so ago. These capital injections are far more attractive than what the government will provide to others that come to Washington. In fact, the Paulson Plan will focus on the weakest companies -- the ones that are breaking the credit ring -- and govt will be negotiating hard in order to avoid putting good money after bad. Some of those companies will rightfully fail. Their key departments will be sold in bankruptcy, and some of the key people involved will be recruited. I myself will be listening to proposals from displaced Wall Streeters who can bring value.

Yesterday there was a report that the FBI is commencing criminal investigations into the failures at Fannie, Freddie, AIG and Lehman. In my view, this is more to do with taking the edge off the emotions of the public than with serious criminal investigation. If there was fraud, it will take months or years to find it and years to prosecute. As traders, don’t waste your time even thinking about it.

The Shanghai Fly today reported that economically speaking, Citi doesn’t think China is in the greatest shape. Here’s what the Fly sent this morning from Shanghai:

http://tinyurl.com/4nrkxv
"Hopes of a rapid recovery in the health of the Chinese economy after the Olympic Games are fading fast on weakening commodity as well as property prices, Citigroup said in a report released Wednesday."

Lan said an unexpected reduction in steel prices for November announced last week by Baoshan Iron & Steel Co., China's largest steelmaker, suggested steel companies weren't expecting any major rebound in economic activities.
Baoshan last week announced a reduction of 800 yuan ($117) a ton, or more than 10% over October, in the prices of hot-rolled and cold-rolled steel coils for November, according to reports.

Do you recall me wondering how much capital T. Boone Pickens has lost for his hedge fund investors this year? Today, he admitted to losing at least $1 billion so far! So, even the biggest belt buckles in Texas are tarnished today.

Last evening there was a Reuters headline, “Europe shares end lower on anxiety over US plan”. That was misleading. From the time that the Senate hearing started, the European prices started to gain strength.

The Morgan Stanley and Goldman Sachs joining the Fed banks, which severely limits their use of leverage, will mean that many of their biggest-hitter front office staff will quit. They will not be able to service their hedge fund clients anymore, which will diminish their personal incomes and bonuses, so they will depart to join or set up boutiques. This issue was the big reason, in my mind, why in the past couple weeks, the share prices of MS and GS were dropping while the shares of traditional banks were relatively out-performing. I think insider trading resulted that is potentially criminal. That internal debate and subsequent decision was a material one; the public shareholder had every right to trade on the same basis as insiders and that was deliberately withheld from them. MS and GS CEO’s should have disclosed these discussions, and should be held accountable. I do think there is a strong likelihood of criminality there that could easily be investigated and discovered for prosecutors.

The biggest issue facing the monetary authorities today is the credit derivative swap market. Do you recall how many times I stated that over the past two years? This is why the system collapsed in June 2007, and the enormity of the implications was the reason that HB&B withheld the info from the public, which permitted them the time their insiders needed to off their positions. I think the SEC ought to investigate personal trading by every registered officer and director of HB&B since the start of June 2006, and where some of these people can be linked back to knowledge of the CDS crisis, their profits should be retracted by the authorities.

Barry sent me this mail on the subject:

Hi Bill, I can no longer post for some reason so I am sending on this article on Credit Default Swaps as a significant cause of the current crisis. I found it quite helpful, and it may be of interest as Chris Cox said in the hearings today that regulation of CDSs was critical. If it has been on the board, I am sorry for the email intrusion as I can imagine how busy you are.
http://tinyurl.com/4amao3

Love the site and the blog!!

I could go on, but I have other work to do. Remember me when thinking about who called the bottom of this market. And look to the thousands of others who will lie to you when they too take credit.

Have a great day.

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Links & Charts

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International Economics Review

US Economic Calendar.

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Knobias Cara100 Tables

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Cara 100 Daily RSI-7 Charts

At least one RSI value >70:

At least one RSI value <30:

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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

Table 15: Dow 30 List

You can do this table yourself by entering the following string into the Summaries window at www.billcara2.com and then clicking on the link for Performance.

AA AIG AXP BA C CAT DD DIS GE GM HD HON HPQ IBM INTC JNJ JPM KO MCD MMM MO MRK MSFT PFE PG T UTX VZ WMT XOM

Here are the links to interactive Dow charts from Billcara2.com that I broke into groups of ten, which you can add technical indicators for as well. (list one) (list two) (list three)

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The Americas

Here is the latest session data for the exchanges of the Americas.

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Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.

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Here is the latest session data for the Toronto Stock Exchange composite index.

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Sector ETF Summary for the US equity market

The tables I show in this section are for ten (GICS) Sector Index Funds (ETF's) only, but they cover the full spectrum of the US equity market.

Table 1: Cara ETF List

You can do this table yourself by entering the following string into the Summary window at Billcara2.com and then clicking on the link for Performance. XLE XLB XLI XLY XLP IYH XLF SMH IYZ XLU XLK SPY . You can also add more ETF’s – up to 30 in total.

For a list of components to any ETF, go to the AMEX.com web site, and click on ETF's.

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10 (energy: XLE)

Table 2: Senior oil & gas equities

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15 (basic materials: XLB)

Table 3: Senior metals and steel equities

Table 13: Senior gold equities

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20 (industrial: XLI)

Table 4: Senior capital goods makers and transportation

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25 (consumer discretionary: XLY)

Table 5: Senior consumer discretionary equities

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30 (consumer staples: XLP)

Table 6: Senior consumer staples equities

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35 (healthcare: IYH)

Table 7: Senior healthcare equities

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40 (financial: XLF)

Table 8: Senior financial company equities

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45 (technology, semiconductor: SMH)

Table 9: Senior technology equities

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50 (telecom: IYZ)

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55 (utilities: XLU)

Table 12: US Utilities

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International Equity Market USD-denominated ETF Review

Table 14: International equities perspective

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Japanese equity market ETF: EWJ

Here is the Japanese (EWJ) equity market ETF Daily data charts:

Interactive EWJ Daily data:

Interactive EWJ Weekly data:

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U.K. equity market ETF

Here is the United Kingdom (EWU) equity market ETF Daily data charts:

Interactive EWU Daily data:

EWU Daily data:

Interactive EWU Weekly data:

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Canada's equity market

Here is the Canadian (EWC) equity market ETF Daily data charts:

Interactive EWC Daily data:

Interactive EWC Weekly data:

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Bonds & Yields Review

Table 10: Yahoo Finance U.S. Treasury Debt, Municipal and Corporate Bond Yields

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Here is the $USB 30-year Treasury Bond chart.

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US Bond Funds -- Interactive Daily Data Charts

SHY Daily data series chart:

IEF Daily data series chart:

TLT Daily data series chart:

AGG Daily data series chart:

LQD Daily data series chart:

TIP Daily data series chart:

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Table 11: Interest-sensitive securities

Consumer Finance -USA -- Interactive Daily Data Charts

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Commodities Review

$CRB Index

Open Futures Contracts

Interactive Chart of Daily CRB Commodities Index:

Interactive Chart of Weekly CRB Commodities Index:

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Oil Review

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

Interactive Chart of Daily Crude Oil:

Interactive Chart of Weekly Crude Oil:

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Gold & Precious Metals Review

Spot gold chart for the week

Interactive Chart of Daily Gold EOD Continuous Contract Index:

Interactive Chart of Weekly Gold EOD Continuous Contract Index:

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Spot silver chart for the week

Interactive daily data

Interactive Chart of Daily Silver EOD Continuous Contract Index:

Interactive chart of the Silver Bullion index.

Interactive Chart of Weekly Silver EOD Continuous Contract Index:

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Spot platinum chart for the past three days

Interactive Chart of Daily Platinum EOD Continuous Contract Index:

Interactive Chart of Weekly Platinum EOD Continuous Contract Index:

Interactive chart of the Platinum metal index.

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Spot palladium chart for the week

Interactive Chart of Daily Palladium EOD Continuous Contract Index:

Interactive Chart of Weekly Palladium EOD Continuous Contract Index:

Interactive chart of the Palladium metal index.

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Interactive Chart of Weekly Copper EOD Continuous Contract Index:

Interactive Chart of Daily Copper EOD Continuous Contract Index:

Interactive chart of the Copper metal index.

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Table 13: Senior gold equities

To watch the moves in precious metal miners, you will have to monitor the individual stock charts, preferably in real-time, as follows:

NEM ABX AU GFI GG HMY AUY KGC BVN
Interactive Daily data
Interactive Weekly data

MDG LIHRY AEM BGO IAG EGO RGLD GOLD CDE GRS
Interactive Daily data
Interactive Weekly data

CBJ SSRI SIL NG KRY UXG GRZ TSE_HRG TSE_GUY TSE_AGI
Interactive Daily data
Interactive Weekly data

NXG GSS MNG DROOY MFN RNO RANGY MRB CLG
Interactive Daily data
Interactive Weekly data

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Here are the key Silver miners and the SLV ETF:

SLV SIL CDE HL PAAS SSRI SLW MGN

Interactive Daily data
Interactive Weekly data

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Here are the Weekly and Daily Data charts of the indexes:

Interactive Chart of Daily U.S. Goldminers Index:

Weekly U.S. Goldminers Index:

Interactive Chart of Weekly U.S. Goldminers Index:

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The U.S. goldminer share trust ETF trades under the ticker symbol GDX.

Here are the U.S. Goldminer ETF (GDX) index Weekly and Daily data charts:

GDX Daily data:

GDX Weekly data:

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The Toronto Exchange-listed goldminer iUnits S&P/TSX Capped Gold Index ETF trades under the ticker symbol TSE:XGD. Yes, just like GDX on the AMEX, you can trade XGD on Toronto.

Here are the Weekly and Daily data charts for the TSX Goldshares (XGD) index:

Interactive Chart of XGD Daily data:

Interactive Chart of XGD Weekly data:

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Forex Review

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

Interactive Chart of Daily U.S. Dollar Index:

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Interactive Chart of Daily Euro Dollar Index, priced in USD:

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Daily British Pound Index:

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Daily Japanese Yen Index:

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Daily Canadian Dollar Index:

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Wrap-up