Today’s gloomy economic news

The European Interbank Covered Bond Council has halted trading until at least Monday, and possibly until the new year, citing instability, widening spreads, and illiquidity. “Covered bonds are debt securities backed by cashflows from mortgages or public sector loans” but you probably already figured that out. This would seem to be a serious sign that the wheels are coming off.

Today’s 211 point drop in the Dow confirmed a Dow Theory sell signal, this being an indicator with a solid long-term track record. Since it’s a well-known indicator, it can be self-fulfilling, as investors may sell based upon it and traders will sell or short because they think others will sell.