Clear-Air Turbulence

Airplane pilots call it clear-air turbulence. You're flying along -- everything should be even. For no apparent reason, you hit waves.

That describes last week's action in the financial markets. To give just one example, the Dow Jones Industrial Average dropped 538 points to its lowest level since Oct. 27, and is now 11% below its Jan. 14 high.

The week began with clear skies. Everything seemed completely under control on Monday and Tuesday. The active long-bond futures were at a two-month high. Nasdaq 100 futures rose 4.8% in two days. Gold fell below $300 an ounce. The ice was melting, and the air was balmy. Visibility, as pilots say, was unlimited. ...