Big Heaping Serving of White-Hot Doom, Friday Edition

The babblers on CNBC are speaking in tones usually reserved for funerals this morning, as the S&P 500 futures go limit down and Dow futures are close to limit down. I am so, SO glad we added bearish positions to Red-Hot Canadian Small-Caps, Red-Hot Global Small-Caps and Red-Hot Commodity ETFs yesterday. But after the carnage in foreign currency markets the previous day and overnight -- a sign that whatever central banks were trying to do to stabilize the global financial system wasn't working -- it seemed the smart thing to do.

And it's not only stock futures that are down. OPEC didn't cut nearly enough (1.5 million barrels per day) so oil is cratering. Gold (on paper anyway) is below $700. The euro is plummeting versus the US dollar, and the US dollar is plummeting versus the yen. Hedge funds are being forced to sell EVERYTHING, and risk is anathama to global investors.

What we can take away from this ...

• The world is pricing in the most severe economic downturn since at least the 1970s and maybe since the Great Depression
• The financial magicians at central banks around the world will probably take extraordinary action over the weekend.
• The S&P 500 could fall to 500 in the next few weeks ... or it could rebound hard if the Central Banks' flood of liquidity finally starts to unclog the financial system. Heck, we could even see a hard bottom today or Monday. My crystal ball is broken.

I'm not making any strong commitments either way, though I might recommend more downside hedges on a decent bounce.

In other news ...

Did you see Alan Greenspan speak before Congress yesterday? Now that was must-see TV. Best line of the day goes to Steve Goldstein at Marketwatch:

For a man who was once remarkably hard to decipher, Alan Greenspan is now as clear as an empty Lehman Brothers office.

And remember how the Russians were bailing out Iceland? Now, maybe the Russians need someone to bail them out! They join the long line including Hungary, Ukraine and Belarus.

And OPEC decided to cut supply by 1.5 million barrels per day starting next month. If they thought that was going to impress anybody, they're wrong. 3 million barrels per day would have been more like it. Now they'll have to cut 4 million to prevent oil going to $50.

China's economy is slowing down. Econbrowser takes a look with some nice charts.

Also, the 30 year treasury bond has now reached its lowest yield since structured trading began. It is now yielding 3.8%.

India's market drops 11%, most in 16 years.
http://www.bloomberg.com/...

Russia halts trading until next week.
http://www.bloomberg.com/...

Check out my new gold and energy blog at MoneyAndMarkets.com