The stock market futures for this morning’s opening in New York look pretty dismal. In Europe, markets are down over 1% with more bad news hitting the financial services sector as Fortis scraps a $2 billion dollar dividend payment to shareholders.

Thus far, June is the worst month for global investors since January, with the S&P 500 Index plunging 6.6% and the MSCI World Index down 7%.

From a technical standpoint, the Dow Jones Industrials and the S&P 500 Index are now just whiskers away from breaching their March lows. This is bad news for investors since a violation of these support levels implies a serious freefall lies ahead in the absence of lower interest rates, lower commodities prices (namely oil) and weak corporate earnings. This remains a bear market. The post-Bear Stearns rally since the Fed’s rescue in mid-March is over.

The above chart isn’t pretty. The Dow now trades below its 50-day and 200-day moving average while market breadth continues to disintegrate. Many stocks are getting trashed in New York and overseas. In fact, stocks in Europe, and many emerging markets in Asia are down more than 20% and in some cases, off more than 30%. Chinese equities are down 43% and in India equities are down a dizzying 30%. Only Brazil, Mexico and a handful of other bourses are up a few percent in 2008.

Meanwhile, I’ve had my doubts all along about the big advance for the Dow Jones Transportation Average earlier this spring. Without a confirmation from the Dow Industrials, that rally is a farce. How was the market supposed to make a serious advance with skyrocketing energy prices, plunging real estate values and consumer confidence at a 16-year low?

Also, the credit markets, which had been improving since late March, are now seizing up again in late June. Credit spreads are narrowing across the board, junk bond defaults are rising, auction rate securities are still clogged and LIBOR rates are rising relative to T-bills, also known as the TED spread.

This bear market, which began last August, isn’t over. I imagine this will remain a very tough summer until elections in November. Seasonal strength should arrive later this fall as the big sellers continue to unwind their leveraged bets and stage a final act of capitulation over the next few months.

Stocks worldwide, especially in the United States and Europe, are cheap. Compared to bonds and other assets -- common stocks now pay attractive dividends on both sides of the Atlantic and for overseas investors the United States is ‘On Sale’ with a dirt-cheap currency. U.S. assets are cheap.

But for stocks to muster a sustainable rally or even embark on a new bull market, the Fed and other central banks have to contain inflation, namely soaring energy and food prices. That won’t happen until the economy slows further and demand destruction drives oil prices sharply lower. Fasten your seatbelts.