Is there a squeeze developing in the cocoa market? Is sure feels and smells like it. A squeeze is when one firm buys large quantities of a product, usually a product in short supply, holds it, waits for the price to go up and then unloads it at the higher prices.

This is exactly what is happening in the cocoa market. Amajaro, a hedge fund, took delivery of 240,000 tons of cocoa on London's Life exchange. The cocoa was then certified and stored in warehouses ready for resale.

After ticking up for nearly two-and-a-half years, consumer confidence took a dramatic plunge, falling to an eleventh month low. The preliminary July reading came in at 66.5, down sharply for June's reading of 76. The median forecast had been for a reading of 74.5 among economists polled by Reuters.

The key factor, of course, is jobs and job prospects. Richard Curtin, director of the survey, said: "Income and job prospects were extraordinarily weak and those bleak prospects have made consumers much more cautious spenders." He further stated: "Moreover, consumers reported renewed weakness in the economy and were more likely to anticipate additional problems in the year ahead."

The lifeblood of business is credit. Unfortunately, the credit available has been shrinking instead of growing. As of June 30, U.S. commercial and industrial loans held by banks have declined to $1.24 trillion from $1.6 trillion in 2008

Ben Bernanke, Fed chairman cites that credit creation as the key to economic growth. He has prodded banks consistently to lend more. Banks, instead of loosing up. are making it harder for small businesses to get credit. Even those with a good credit rating are finding it hard to get loans. Bernanke stated: "Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges." Again speaking to lenders he stated: "Our message is clear. Consistent with maintaining appropriately prudent standards, lenders should do all they can to meet the needs of creditworthy borrowers."

In a footnote in a 216-page report released last week, the Bank for International Settlements (BIS) disclosed that since December, it has taken in 349 metric tons of gold from central banks, which swapped it for $14 billion in cash.

Why is this important? First off, the BIS is the central bankers' bank. We can gather from this that central banks needed cash to pay their bills. So they pawned their gold.

Despite this week's equity rally, investors are nervous about the future. They still fear a double dip. For that reason they are running to pour funds into money markets.

EPFR Global, which tracks the flows of money market funds, reported that money market funds had their greatest inflows in 18 months, some $33.5 billion.

Some of the world's biggest fund managers are now holding up to 40% cash in their portfolios. The main driver behind the flow of funds into money markets is fear, fear of another market slide. Chris Tuffy of Credit Suisse said: "This is about capital preservation."

Information about China's dealings with their foreign exchange reserves is often hard to come by. The State Administration of Foreign Exchange (SAFE) manages the exchange account.

SAFE has a website that has answered in broad terms China's position on U.S. treasuries and gold. First off, China has $2.45 trillion in reserves. Their goal is to increase the value of their holdings while at the same time maintain stability of their portfolio.

The story is about gold. Gold in London traded at $1,186 per ounce, a six-week low. Just a few weeks ago, gold made a new high at $1,265.30 per ounce.

So far this year, gold has risen 8.3%. Profit taking came into the market as the market made new highs. Investors sought to protect themselves from the turmoil in Europe, and there was concern that the global recovery would soften. Now the pressure from Europe has subsided somewhat, the euro has rallied against the dollar, and stocks are falling.

Global investment bank earnings are expected to be down 50%. Why such a drop? A key factor has been the freeze up of takeovers and IPOs. The European banks will be especially hard hit. The sovereign debt crisis in countries like Greece, Spain and Portugal has sent investors to the sidelines.

In the U.S., the boom in equities and accompanying commissions has cooled considerably. Worries about financial reform has also taken its toll.