Failed German Bond Auction Sends Stocks Scurrying Lower

Germany, a tower of strength throughout the ongoing European debt crisis, got a taste of the bad medicine which has been doled out mostly across Southern European nations, as an auction for $8.1 billion in German Bunds was not well received, as bids covered only $5.9 billion of the offering.

Additionally, investors demanded a higher yield on the 10-year note, pushing the yield to a six-week high at 2.02%, higher than the corresponding 10-year note in US treasuries, which plummeted to as low as 1.88% during the course of the day.

Foremost on the minds of traders of all stripes, the question was simple, "If Europe's strongest nation cannot fund itself, what's next for the continent and for the rest of the planet?"

The news struck just prior to the opening of US markets. Along with unusual readings on US durable goods orders, personal income and personal spending, markets opened sharply lower and languished in the red all day.

Personal income for October showed a gain of 0.4%, while personal spending increased a mere 0.1%. Along with those figures, both below forecasts, the national savings rate fell to 4.1% in the third quarter compared to 5.1% in the second quarter, suggesting that Americans are dipping into savings or saving less in order to make ends meet, a scenario of which most lower and middle-income citizens are already well aware.

Durable goods orders, a key driver of broad economic growth, fell sharply, off 0.7% and yielded another odd number. Without transportation orders (autos, planes, etc.), durables were up 0.7%.

Spooking the market even more were poor results in the flash reading of China's PMI, which showed contraction, at 48.0, down from 51.0 in October. The flash reading generally captures about 85-90% of the businesses surveyed. The final reading will be released on December 1.

As US markets pause to give thanks (for what, nobody's exactly sure) on Thursday, economies and markets are gripped by turmoil, fear and trepidation over an imminent recession and possible currency collapse in Europe and elsewhere. With half of Europe likely already in recession, global growth seems to be stalling out in much the same fashion as it did in 2008. The Euro fell to its lowest level against the US dollar in six weeks, though still holding valiantly to the 1.33 level, though without relentless priming and pumping from the US Fed, the Euro seems doomed to fall to levels not seen since the Euro's earliest days.

That Europe can actually fund itself and fix the problems caused by decades of overspending appears more and more a fiction that only financial broadcasters and government officials mouth. Whether they actually believe what they're saying is a matter for speculators.

The Dow Jones Industrial Average fell for the fifth time in the last sixth sessions. The NASDAQ and S&P 500 fell for the sixth consecutive day. All of the major averages are now back below where they started the year and each has fallen below its 50-day moving average. The number of advances was at a three-month low and new 52-week lows outpaced 52-week highs by its highest margin since August.

All sectors were lower, led by energy, basic materials, technology and financials. Bank of America, possibly the most-hated financial institution in the world (though Goldman Sachs may garner even more angst) fell to 5.14 at the close, the lowest level since March of 2009, the bottom of the 2008-09 downturn. All 30 Dow stocks finished lower on the day.

Gobble, gobble, Happy Thanksgiving. See you on Black Friday.

Dow 11,257.55, -236.17 (2.05%)
NASDAQ 2,460.08, -61.20 (2.43%)
S&P 500 1,161.79, -26.25 (2.21%)
NYSE Composite 6,951.56, -143.33 (2.02%)
NASDAQ Volume 1,715,325,750
NYSE Volume 3,798,937,500
Combined NYSE & NASDAQ Advance - Decline: 767-4911
Combined NYSE & NASDAQ New highs - New lows: 39-371
WTI crude oil: 96.17, -1.84
Gold: 1,695.90, -6.50
Silver: 31.88, -1.07