The TED spread, or the difference between US Treasury bill and eurodollar interest rates, is an indicator of perceived credit risk in the general economy. US government Treasury bills are considered risk-free while eurodollar borrowing costs, measured by the London interbank offered rate (LIBOR), reflect the credit risk of lending to commercial banks.

When the TED spread increases it is a sign that lenders believe the risk of default on interbank loans is increasing. Interbank lenders therefore demand a higher rate of interest, or accept lower returns on safe investments such as T-bills. When the risk of banks defaults is considered to be decreasing, the TED spread decreases. The TED spread fluctuates over time but has often remained within the range of 10 and 50 basis points (0.1% and 0.5%), at least until 2007. A rising TED spread often presages a downturn in the U.S. stock market, as it indicates that liquidity is being withdrawn.

- Clive McKeef

Like a leaky boat, Wall Street just keeps sinking amid controversy over the proposed government bailout. And Fed chief Ben Bernanke has poured more cold water on the investing mood by saying global markets remain under extraordinary stress.

Stock futures are pointing lower as Congress has shown some reluctance to rubber-stamp the $700 billion bank rescue plan, which some say could create more problems because of the ballooning deficit while not resolving the credit crisis.

But while not everyone loves this bailout, it appears to be all we've got.

The good news is that oil prices, whose huge gains also wigged out the stock market yesterday, have also fallen.

U.S. Treasuries are mostly higher, while the dollar is steady against an index of major currencies.

Home builder Lennar reported a smaller-than-expected quarterly loss, although revenue plunged 53 percent.

Kohlberg Kravis Roberts - a private equity firm that is planning on going public - posted a net loss for the first half of 2008, compared with a year-earlier profit.

-- Lisa Von Ahn

The combination of Bank of America and Merrill Lynch looks to create a powerhouse in the all-important investment banking league tables, topping current front-runner JP Morgan with, for example, 141 deals to JP Morgan’s 125, in global equity underwriting.

Together, they make the top underwriter for global debt, equity and equity-related transactions since the start of this year.

–Data from Matthew Toole, Thomson Reuters.

A look at the declines in the share prices for the major U.S. investment banks, excluding Bear Stearns Cos., since July 2007, the month rating agencies moved to downgrade bonds backed by subprime mortgage securities. JP Morgan Chase bought Bear in March of this year in a Federal Reserve-backed bailout.

The S&P 500 index plunged into a bear market on July 9 2008 — more than 20 percent below its record high close of 1,565.15 points on Oct. 9, 2007 — after ceding to the pressure of a housing slump, a credit crisis, record-high oil prices and a weakening economy.

The S&P 500 was officially introduced in 1957 but its value has been extrapolated. Since 1929, whenever the index has fallen into a bear market, it has on average shed 29.4 percent of its value for the duration of the slump, which has averaged just over a year.

The S&P 500’s worst bear market occurred in the early years of the Great Depression and stretched from April 10, 1930, to June 1, 1932.

The following is a recap of the previous 10 bear markets for the S&P 500, using “The Stock Traders Almanac 2008″ data:

Asia cemented its status as the 21st Century workshop of the world by exporting the goods global consumers loved at prices that kept falling. Now it’s producing the one thing the world hates — inflation.

Higher prices from the world’s factory floor have major implications for a global economy still reeling from the credit crisis and increasingly dependent on Asian exports.

Read the full story by Kevin Plumberg

US Treasuries have outperformed corporates thanks to fears of a US recession and spreading fallout from the subprime mortgage crisis. Some money managers are looking for this trend to reverse soon as Treasuries look pricey and corporates appear overly beaten down.