It's a fair bet that most participants in financial markets were more than happy to wave goodbye to October 2008. Across the globe major stock market indices have typically fallen between 15 and 25 per cent. History shows that October tends to be the crash season for equity investors – events in 1929 and 1987 being the obvious examples.

But let's look forward. Perhaps for the first time since the onset of the credit crunch in the middle of last year, a proper consensus is beginning to form that we have seen some sort of bottom – that action by the authorities is concerted and extreme enough for us all to begin planning our futures.

One of the notable aspects of this crisis has been the lack of a consensus – and the constant fragility of the hopes of recovery.

Having watched various crises over the years, I am normally struck by how market participants are able to peer through the gloom and see recovery on the other side. They know that rocky times may lie ahead, but they can see that point in the future when stability will return – and that gives them inner confidence.

One of the clear pointers to the fact that this particular crisis was going to be back was the actual lack of that foresight. From the outset, there was no consensus – no central, stable view of what was happening or how long it might last. Instead we had polemic projections: this was either Armageddon or it was a passing squall, after which growth and confidence would soon return. In the event, each time a consensus on recovery began to form, some event would come along to shatter illusions.

It happened in November last year, when many in the market thought that the publication of third quarter figures from Wall Street banks would clear the air on the exposure to subprime debt. Sadly it didn't. Recovery was then supposed to arrive in January, once bank balance sheets had been properly stressed tested by auditors at the year-end. No chance.

Then it was the Bear Stearns collapse – an event so appalling to the financial establishment that it had to prove the cathartic event that shook the financial system back to its senses. Wrong again.

The series of recapitalisations of Europe banks around June was supposed to provide new underpinnings. Nope.

Then it was Lehman. Then it was the bank bailouts across the US and Europe. And now it's about rate cuts – a reduction in official borrowing costs to just one per cent in the US, with further cuts expected in the UK and across the eurozone over the coming days.

We will see. Quite a few commentators have pointed out that you do not cure someone suffering from cheap money by giving them more cheap money. But enough damage has been caused – lessons of over leverage have surely been learned. The priority now is about stopping whole economies shrinking – most notably the US – and that means using whatever tools are available to lighten the load on business and commerce.

Meanwhile, there is something fresh for the financial markets to focus upon: the next US president.

Stephen Pope, chief global market strategist at Cantor Fitzgerald, a big money broker, asks whether it is possible to judge from platform proposals, history, or from broad party policy which candidate might be better for financial markets.

On Barrack Obama: "Investors are right to express their gravest concern over the proposals to reform health care. His environmental proposals may help alternative energy companies. Obama also plans to spend $60 billion on infrastructure to build a high-speed rail and repair the energy grid; good for construction firms. He seeks universal Internet access which will help technology companies. This involves doubling spending on basic research, subsidise high-speed internet hookups."

John McCain: "He is advocating a continuation of the Reagan/Sr Bush/Jr Bush doctrine of lower taxes at the top expecting a trickle down effect will be felt by the middle and lower income earners. That policy would be helpful to upmarket retailers and investment firms. Whilst McCain claims to be a champion of fighting 'global warming' he is all for offshore drilling as a way of breaking America's reliance on foreign oil. That will favour oil exploration firms as well as the oil majors. McCain is opposed to the 'socialisation' of health care wanting individuals to become more responsible for having their own insurance programme. That would defend or boost the margins. McCain does not plan a premature exit from either Iraq or Afghanistan. If he were successful, it would be a boost for the defence and defence-related hitech industries."

Pope points out that it is completely wrong to portray Senator Obama as a "Socialist" and in the same way it is wrong to state that Senator McCain is opposed to all government spending.

"Looking at where the US economy is now, it does feel as though the mood, not just in the US; abroad as well, is that it is time for a change. A new direction so that as the US economy heals, repairs and recovers; the USA can also present a new face to the world. In (the 21st century) the US cannot project its will as easily as it did in the last two decades of (the last century). A new American mindset is needed."

Indeed, but look at the chart above. This shows, over a period of 85 years, how US stocks have performed under alternate Republican and Democratic presidencies. It will probably shock those who instinctively believe that right-wingers are better for business than left-wingers. Quite clearly, since before the Great Crash, Democrats have been better for stocks by some margin!

Obama is ahead in the polls. A new consensus is cautiously being formed that financial markets are facing the worst. Maybe we can begin to look forward with just a little more confidence. Maybe.



- Paul Murphy is an Associate Editor with the Financial Times