CNBC's Bob Pisani reports on what traders are telling him at midday.
A lot of fear in the market, particularly at the open. TrimTabs estimates that U.S. equity funds had outflows of $5.5 billion Tuesday, the second highest outflows of the year, after the $6.5 billion that came out Feb. 27 on the Chinese stock market plunge.
Bears have been emphasizing that this is the beginning of the long-awaited correction. They have the first wind at their backs all year. They believe the combination of the debt and housing crises will bring down the markets.
Not surprisingly, the bulls think this is hogwash. High fear levels are a good opportunity, they say. There is nothing wrong with the markets. What's happening is a repricing of the sale of leveraged bonds, which had been mispriced for no risk. They are now searching for an appropriate price.
In the next two to three months, this repricing will occur. At the end of the summer, much of the leveraged buyout debt will be sold, and stocks will get a lift in September and October when the markets realize the sky has not fallen.
In the meantime, the banks are not losing money on the LBO mezzanine loans--they are in fact earning interest on it.
No LBO deal has collapsed, and it's unlikely a major one will collapse.
Bulls continue to emphasize the global growth story. Indeed, the commentary from the IMF yesterday in its revised World Economic Outlook mirrored the bull story.
They raise global growth forecast to 5.2% from 4.9%. They note that China is the Largest Contributor To Global Growth This year. They see faster growth in Germany, China, Russia and India. They say the U.S. credit-market risks are to stay "largely contained."