We're seeing red across the board around the world. Europe closed sharply lower. Britain's FTSE closed down 1.8%, France's CAC 40 closed down 2.3%, Germany's DAX closed down 2.0%, and Spain's IBEX closed down 3.0%. Asia markets got wrecked, led by the Shanghai Composite, which crashed by 5.4%. US stocks are in the red with the Dow down 218 points (1.2%); the S&P 500 down 25 points (1.2%); and the Nasdaq down 58 points (1.2%). Meanwhile, bonds are surging with the yield on the 10-year Treasury note falling to as low as 2.184% from 2.257% earlier Tuesday. Gold has also been rallying. "Angst reigns as Oil drops — and a trio of headlines (Greek Elections, China clamping down on Leverage in Credit, 'considerable time,' removal from Fed)," JonesTrading's Dave Lutz wrote ahead of the US opening bell. Let's unpack that trio a bit. Greece On Monday, Greek Prime Minister Antonis Samaras announced that Greece's presidential elections would be held Dec. 17, two months earlier than scheduled. "The presidential election is conducted by Greece's legislators, not its population," Mike Bird of Business Insider said. "But the government needs a super-majority to install a president, which it doesn't have," he wrote. "If it can't elect a president, that might precipitate a general election, and the radical Coalition of the Left (Syriza) is leading the polls." This uncertainty echoes the Greek crisis years ago. Greece's ASE index crashed, falling by more than 12% Tuesday. "Samaras today nominated Stavros Dimas, a 73-year-old former European Union commissioner, for the post," Bloomberg's Nikos Chrysoloras and Antonis Galanopoulos reported. "Samaras will have to rely on opposition votes to push through his pick for the mainly ceremonial post; without them, his government will fall." China China, the world's second-biggest economy, is slowing. And this has been expected as Chinese policymakers aggressively make moves to rein in loose credits, cool off the housing market, crack down on corruption, and shift the economy from one driven by exports to one driven by consumption. Earlier Tuesday, Chinese policymakers took another step in clamping down on loose credit. From Bloomberg News: "The nation’s clearing agency for exchanges said yesterday it won't allow bonds rated below AAA or sold by issuers graded lower than AA to be used as collateral for short-term loans obtained through repurchase agreements. The new rules sparked a retreat in lower-rated bonds of local government financing vehicles and contributed to a tumble in Shanghai shares as noteholders reassessed the appeal of owning such debt." On a somewhat unrelated note, the Shanghai Composite has been white-hot, as mom-and-pop retail investors have been opening brokerage accounts like crazy to play the Chinese stock market. The Shanghai Composite plunged 5.4% Tuesday. But despite the violent move, the index is still up 39% since the beginning of the year. 'Considerable Time' In the US, Fed-watchers are debating when the Federal Reserve will begin tightening monetary policy by raising interest rates. The Fed has been using the phrase "considerable time" to describe the period between the end of its bond-buying quantitative easing program and the first rate hike. Fed Chair Yellen once suggested that "considerable time" could be as short as six months. With QE ending in October and the US labor market improving sharply, experts warn that the Fed could soon drop the phrase "considerable time." "Senior officials have hinted lately that they’re looking at dropping this closely watched interest-rate signal, which many market participants take as a sign rates won’t go up for at least six months," The Wall Street Journal's Jon Hilsenrath reported Tuesday. Still, some Fed officials are arguing the opposite as inflation remains well below target levels. "For my purposes I am not in a rush to drop" "considerable time," Atlanta Fed President Dennis Lockhart said Monday. "Inflation is the one key element that does not seem to be consistent with what we are seeing in terms of growth and what we are seeing in the labor market. [If inflation] goes completely sideways or begins to indicate a decline, disinflation, then I think it will raise some concerns." The prospect for tightening and all of the uncertainty surrounding appears to have investors a bit more cautious lately. Some Context At around 2,040, the S&P 500 is down by around 2% from its intraday high of 2,079 which was set on Friday. It's also still up 10% for the year and up 206% from its March 2009 low. Stock market bulls have actually been warning investors to prepare for some heightened volatility. Charles Schwab's Liz Ann Sonders put it very bluntly at a media event Thursday, noting that the Black Monday crash of 1987 occurred in the middle of the secular bull market between 1980 and 2000. NOW WATCH: 6 Compelling Correlations That Make Absolutely No Sense OO.ready(function() { OO.Player.create('ooyalaplayer', 'E2c3ZvcToQEyEhYV2OhejNw5TK4KpH5o'); });Please enable Javascript to watch this video SEE ALSO: The Bond Market Doesn't Look Ready For What'll Likely Happen On Dec. 17 Join the conversation about this story »
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