TED Breaks 400bp

So much for unprecedented global coordinated rate cuts, not to mention a UK bank bailout which could reach a mind-boggling 500 billion pounds. TED’s at 403bp, European stocks are sharply lower across the board, and the US stock market, after a truly horrible Tuesday, looks as though things aren’t going to get any better on Wednesday (down 1% at the open).

I’m a sunny optimist by nature, and so I’d love to believe Doug Kass when he says that this is all driven by hedge funds selling stock-index futures and that we’re in for "a reverse panic to the upside". But I’ve learned my lesson, so I’d rather be pleasantly surprised by such a thing than actually place any hope in it. This certainly looks like a sell-off based on fundamentals to me, rather than anything easily explicable by technical factors to do with futures activity. Unless and until that TED spread stops going up and starts going down, the big market forces are going to be to the downside, not the upside.

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