Nothing like a 300-point decline in the Dow before lunchtime in New York to focus the mind.
But it’s not quite clear just what traders in the US are focussing on, because there’s just so much going on – AIG’s bailout, money market funds breaking the buck, an incredible flight to quality, a Russian market meltdown, a Fed that’s running out of money and an almost complete loss of faith in the gentlemanly promises that once sustained Wall Street.
US equity indices continue to leak lower and money markets remain frozen.
The US government – and recent events suggest this term now encompasses the Federal Reserve and the Treasury – is running out of ammunition, and options.
In the words of Markit’s Gavan Nolan, “confusion reigns”:
[C]onfidence has been damaged to such an extent, and uncertainty so prevalent, that investors are still pessimistic. Financial institutions are scrambling to assess their exposure to Lehman. Interbank funding rates increased again today, despite the Federal Reserve and Bank of England providing additional liquidity facilities.
What – or rather, and frighteningly, who will rattled investors be focusing on next?
