Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of investment bank Jefferies Group (NYSE: JEF) were taking a beating in early trading today, falling as much as 20% before recovering substantially.

So what: It seems investors were worried that out-of-control European bets could put Jefferies at risk in a replay of what happened to MF Global. So, earlier this week, Jefferies issued a press release saying (and I'm paraphrasing here): "Look dudes, we have very little exposure to Europe, so chill out."

Apparently that didn't work as well as hoped. A credit downgrade from Egan-Jones reignited fears today, as the agency said it was worried about Jefferies' $2.7 billion exposure to euro-area debt. The bank tried to combat those rising concerns today by issuing another statement -- "Dudes, seriously, we're telling you we're not at risk from Europe" -- this time giving more granular detail. It noted specifically that Egan-Jones' numbers ignored the bank's offsetting short positions.

Now what: According to what the company is saying, it certainly doesn't seem like this is another MF Global in the making. And unlike MF Global, which was purposely trying to take on more risk, Jefferies is generally a conservatively managed bank. Unfortunately though, unless investors are convinced, this situation could be problematic for Jefferies since, as we've seen many times over, this is a confidence business, and if you lose the confidence of lenders and counterparties, you could be in big trouble.

As of this writing, Jefferies stock is down 4.2%, a marked recovery from earlier in the day. So it appears for now that the worst of the fears may have been allayed.

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