World oil prices fell as low as $118 a barrel in Tuesday's trading, with investors apparently speculating that the economic slowdown in the United States and some other nations will cut demand for energy.

The economic indicators and scheduled events this week are all over the map with numbers due out in retail, wholesale, housing, manufacturing, consumer confidence and employment plus central bank announcements with potential to stir up Forex markets.

We just got the employment report for the month of July. The numbers were somewhat better than Wall Street was expecting on the headline. However, the job and unemployment numbers look pretty weak once you dig into the details.

The Conference Board just released its July consumer confidence index. The index ticked up to 5.19 from a revised 51 in June.

The Beige Book report, just released by the Federal Reserve, doesn't tell a very happy tale about the U.S. economy. In fact, I'd call it downright "blue." A few excerpts with my emphasis added:

Back on March 31st, when Mock The Market was a mere one-month old, I wrote a post entitled "Are We In a Bear Market?" Since I had virtually no readership at the time, I had to answer my own question, which was a resounding "yes." Now that the market is down significantly since then, and everyone is clear on the fact that the worst is most definitely not over, what happens next?

Yesterday Texas oilman T. Boone Pickens gave an extended account of his plan to break America's dependency on foreign oil. With a combination of domestic natural gas and renewable alternative, T. Boone Pickens offers an action plan to save America's energy future. The campaign website, Pickensplan.Com, went live today and has already gained much popularity being the number one searched topic in Google.

Although it might not fit the technical definition of a recession (2 consecutive quarters of negative growth), there is no doubt that most Americans already feel like we are in one.

The current weakness of the U.S economy is attributable to the goods trade deficits that have grown from $189 billion in 1996 to $826 billion in 2007, the latter equal to the value-added of nearly 8 million industrial workers. In other words, it would take the export of the goods produced by 8 million American workers to bring trade into balance.

Three out of four Americans blame President George W Bush's policies for the country's economic woes and are turning increasingly pessimistic.

In a widely anticipated event, Moody's finally succumbed to mounting criticism from everyone in the investment community and downgraded MBIA and ABK. MBIA's rating was cut five notches and ABK's three. Moody's retained a negative outlook on both insurers.

The bad consequences of a weak dollar are well known. But there are good consequences as well. The US needs to attract foreign investment and a weak dollar makes US investments look attractive to foreigners.