Commodities get crushed and commodity traders are feeling low. Like a nine month low on oil, a six month low on RBOB wholesale gasoline futures, an 18 month low on heating oil, a 6 month low on copper , a 21 day low on gold, a 6moth low on silver. Notably bucking the downtrend yesterday was coffee and orange juice. The market must have believed that after a day like yesterday that perhaps a lot of drinking would soon be going on.

Doom and gloom took control as a slew of bad data and Spanish bank worries drove down demand expectations. The Philly Fed was particular disappointing especially on the heels of weak Chinese data. A report from Bloomberg that Spain's banks would need up to 62 billion euros ($78 billion) in capital to withstand a worst-case economic scenario, according to two consulting firms hired by the government to conduct stress tests on the lenders. Oliver Wyman Ltd. estimated that the financial system would need between 51 billion euros and 62 billion euros should Spanish gross domestic product shrink by 6.5 percent and house prices fall as much as 60 percent from their peak. Roland Berger Strategy Consultants said banks would require 51.8 billion euros under those conditions. Spain hired the two firms last month to estimate the capital shortfall at the nation's banks as investors questioned the health of lenders pummeled by a five-year real estate slump. Economy Minister Luis de Guindos has said Spain will use the results of the studies to determine how much money it might need to draw from the 100 billion euros made available by Europe after it requested funding to clean up banks.

Those numbers were even direr than the International Monetary Fund predicted. Add to that the expected Moody's downgrade of banks. Reuter's reported that downgrades by ratings agency Moody's will make funding more expensive for banks that rely the most on capital markets, while reinforcing the competitive advantage of safe haven banks that can fund themselves from stable customer deposits.

  No wonder German consumer confidence hit a two year low. Bloomberg News reported that the Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, dropped for a second straight month to 105.3 from 106.9 in May. That's the lowest reading since March 2010. Economists predicted a decline to 105.6, according to the median of 39 estimates in a Bloomberg News survey. Italian consumer confidence fell to a record low, a separate report showed.

Yet With oil people may hesitate to be short especially with a storm brewing in the Gulf of Mexico. As of now there is a 70% chance of that storm becoming a tropical cyclone.

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