The roller coaster ride continues in the equity markets as the Dow industrials opened down 1,200 points after Tuesday’s gain of 1,050.

This latest move comes as news broke overnight that Treasury Secretary Steve Mnuchin gave Republican senators a dire prediction of 20% unemployment in the US if the lawmakers did not pass the $1 trillion stimulus package proposed by the White House.

The story is eerily reminiscent of President Bush’s Treasury Secretary Hank Paulson’s three-page memo demanding Congress fund a $878 billion bailout after the Lehman Bros. bankruptcy in 2008.

Meanwhile Fed chair Jerome Powell appears to be running out of fingers to shore up the leaking global banking system. With each move the Fed makes, another funding and/or liquidity problem steps up demanding it get “the banker of last resort’s” attention.

While Covid-19 has exasperated the market’s liquidity and funding mechanisms, there were problems the Fed was dealing with in the overnight repo market 6 months ago due to the fact that banks did not have a lot of trust to lend money overnight to other financial institutions.

So the global financial sector’s plumbing is certainly clogged, the equity markets will suffer greatly as some firms use stock sales as temporary liquidity to answer margin calls in other derivative markets.

I will come back later today with an update on the news.