Libor is the interest rate that major banks lend each other money. Set each day in London, it is often used as the basis for other interest rates such as for mortgages and credit cards.
Libor is on the run. Something horrible just happened with 1-month rate, which went from 4.82% to 5.22% in one day. That could be an all-time record of panic.
A move that big is unprecedented. It means international banks are getting extremely nervous.
The stock market is very stupid and it will not pay attention to Libor until the chain reaction leads to something more understandable to stock traders. Like some kind of blowup or default, which will probably happen in 4-8 week timeframe. Iâ€™m bullish for now.
For now the conclusion is very simple: I put the chance of Fed rate cut in December at 90%. They just have to cut facing the next wave of financial meltdown.