The early-morning buzz had all the flavor of moldy cheese. Europe blows up, Japan is ailing and the U.S. stock market futures had everyone reaching for the panic button.
But it hasn't unfolded according to script. At midmorning, the major measures are certainly down, but not down in the way the early indicators threatened. Instead of plunging to another eye-popping loss, it seems that things have already started to stabilize. Things remain fragile, but the anticipated bloodbath has yet to unfold.
Why? According to trading desks, a big hedge fund is moving or has moved a big basket of European stocks. Billions. In order to move that kind of product, institutions bid prices lower so as to find buyers and increase liquidity. This one-time event would explain why the markets whooshed lower and then started bouncing higher.
If that is what's going on -- and it's not something darker and more fundamental like a collapsing European or Japanese bank -- we've seen it before. Almost one year ago, money runner extraordinaire George Soros decided to exit the market and he took a lot of the Nasdaq Composite and Dow Jones with him. The Nasdaq dropped 9%, or 355 points. The Dow fell 616 points. And people screamed.
As market watchers grasp at straws, trying to figure out what triggered this selloff -- the selloff could be over. That was one of the major frustrations with that April 14 plummet. A lot of money left on that day, but people couldn't figure out where the ruckus came from.
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