The end of the world has been postponed. Following dramatic plunges in Asian and European markets, the Dow Jones futures index predicted over a 600 point loss by opening. And sure enough, panic selling pushed the Dow Jones Industrial Average down over a thousand points. But within thirty minutes, more than half the loss was recovered.

A friend who is a very sophisticated market player emails me:

There needs to be some settling of the market; bonds are in the ascendancy now until we see some positive shoots or/and the valuations become attractive. China is exporting low inflation around the world as well as hitting growth rates.

The end of August is often a volatile time as people are vacationing, books are squared off--I thin hedge funds that have invested in energy and commodities rebounding are selling what they can because those positions are being severely damaged. In the weeks ahead you will read of massive hedge fund losses or/and closings.

For now, the panic has abated.