Demands for liquidity from the Fed are premature, ditto 'emergency' rate cuts. In this case there 'is' a liquidity challenge with the Carry-Trade since Japan hiked rates, however that doesn't mean the Fed should 'rush to cut'.

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 In fact, Bitcoin (BITCOMP) collapsed again, likely reflecting absence of zero-cost buying via Tokyo financing. Just a thought: 'crypto's' break points to 'carry trade' impact.

But having a significant 50 or 75 basis point cut 'available', if Fed Chairman Powell decides it's actually warranted, not a 'shoot from the hip' stopgap. What he can do is emphasize the Fed's readiness ...say in a Jackson Hole speech.

Market is preparing for a rebound, futures up solidly this evening. However it doesn't mean we won't get an upward start (if the trend carries through Asia, as well as Europe, overnight), then a pullback when margin calls hit again, as that leads to more (another phase) of a rebound effort thereafter. News allowing of course. There are two areas of global concern: Middle East but also UK...it is pathetic although controversial, how British authorities are behaving lately.

Also... all the talk about Buffet and Apple misses one point: it's the threat by lawsuit that might prevent Google from paying for 'default' search status that matters. More on that, and Buffet's liquidation is behind, not ahead. I'm not so enthused about Apple now, but the point is you don't know if Buffet's view has remained the same (if it matters). Everything is complicated and it's August...

The collapse of Bitcoin (I've been negative on it anyway) reinforces the 'Carry-Trade' aspect of the decline. Remember, with all the chatter in the U.S., it's mostly foreign money (drug cartels or laundering cash in a number of countries, especially Asia) that fuels crypto.. hence part of why I disdain too many known money managers embracing such products.

Here I just wanted to mention it as may relate to Yen-based (FXY) assets imploding, where they could borrow for almost 'no' cost and invest in equities, or 'crypto', or anything that doesn't make any or just a little yield, given the lateral shift that's often, obscuring transactions from being reported in various (foreign) systems.

Another (more notable) shocker, was Nvidia saying they have 'chip delays' due to a 'design flaw' in their AI processor (presumably Blackwell). Here I do think the Carry Trade helped accelerate a decline we looked for anyway, but I think the NVDA story infers delays impacting all AI companies relying on them for that particular chip. I should not that some who will use it don't need it for a series of present products, and that includes SoundHound which works fine in many existing systems.

After the close today a lot of 10b5's were activated by SoundHound (SOUN) insiders, several million 'acquired', typically with a zero-cost basis. Earnings Thursday.

Market X-ray: 

As the day evolved, I see I'm not alone in relating this faster S&P (SPX) drop to 'tinges of 1987', but again remember, the market anticipated 8 out of the last 3 recessions, so that's just to denote that not every decline by the S&P means a recession. In this case we are softening, as noted last week again, but it remains a bifurcated economy and society.

It is conceivable some selling was triggered by virtue of Iran's threat, but most of it was continuation and the technical algo-driven liquidation, coinciding with the fallout from Japan's rate hike, and thus a carry-trade (leverage) collapse.

Next week (barring war between now and then) gets interesting with a CPI, a PPI and Jackson Hole, so we'll see. Perhaps lots of shuffling and little defined outcome pending all that. The long-term themes are not merely AI, but also, a trend of 're-shoring' manufacturing to the United States (that's why Intel's lag is hurtful, but also why AMD and ON are higher...   to wit: gives them more time to refine their technologies (both were among the few gainers today). Also, the lawsuit that could stop Google (GOOGL) from paying Apple (AAPL) for default search on iPhone is a big issue if it happens. As Apple's biggest customer is...Google.

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