The China Syndrome

"China syndrome", a nuclear meltdown scenario so named for the fanciful idea that there would be nothing to stop the meltdown tunneling its way to the other side of the world ("China")"

Stocks got pounded this week when the Fed said the rate cut was a "mid-cycle" adjustment. What gamblers wanted was an end-of-cycle easing bonanza, which is what they're going to get. Picture a 2% margin of interest rate error, bought with both hands, going into a recession. Gamblers have been well-conditioned to invest in implosion:

ZH: The Fed Is Funding Trump's Campaign 

CNBC: Disappointment Over Rate Cuts Is Starting To Pay Off - For Bears

"The fear gauge jumped the most since May to 16.12 on Wednesday...The spike occurred when Fed chief Powell took the podium at a news conference and said the rate cut was a “midcyle adjustment,” rather than the beginning of a lengthy cutting cycle, which disappointed the market and pushed the Dow down 280 points that day."

"Some on Wall Street are predicting more violent surges in the VIX are on the horizon."

"Hedge funds have started selling their long positions in U.S. stocks, which creates a catalyst for more volatility, Takada said. Additionally, there is an emerging pattern in the data “indicative of a renewed economic slowdown in China,” which sets the stage for more chaos"

BBG: Corporate Profit Forecasts Are Tanking, Worst Since 2015

"The S&P 500 is up 17% this year despite no profit growth to speak of, while valuations have expanded at the fastest pace in a decade"


CNBC: Imminent Liquidity Reduction $433 Billion

To put this into perspective, Treasury bond issuance over the next six weeks will exceed ALL of the quantitative tightening during 2018:

The same thing happened last cycle - initial rate cuts were viewed as "bullish" for risk assets. Come to find out, they were not...

“This dollar funding problem is already causing problems, in terms of behind the scenes, like repo, so financial conditions are going to change and force the Fed to soften more"

"We want another lengthy rate cutting cycle"