Bank of America: This Chart Shows 'Deteriorating Liquidity' Is at the Heart of Market Carnage
"Ever since the Federal Reserve began to withdraw monetary stimulus, liquidity has steadily been drying up.
Therein lies the crux of the broader stress in financial markets, according to Bank of America Merrill Lynch, which have seen violent selloffs occur following the surprise revaluations of currencies in Switzerland and China, as well as Japan's introduction of negative interest rates.
Head of U.S. Mortgages Chris Flanagan and Strategist Mao Ding don't necessarily lay blame for market dislocations squarely on U.S. monetary policymakers. The two observe, however, that since early 2014—when the Fed began winding down its open-ended asset purchases—liquidity stress has "persistently risen" and served as the proximate cause of the episodic spikes in Merrill Lynch's Global Financial Stress Index that have since occurred...."
If you are out wait it out....futures down again tonight....don't try and short...were headed for a bear market however you do know in these volatile markets bounces can be extremely strong.... Wait for one of those huge bounces to start adding shorts...
Nikkei off 5% tonight...down nearly 1000 points and almost below 16000.....looks like the markets could be headed for one of those August 24th kinda days soon....like I said expect a 30-40% drop....
Yellen likely to be dovish tomorrow, but at the same time make a case for further rate hikes. Any mention of negative interest rates will send the stock market SPX+50 or more.
It is uncomfortable if you are short into the testimony to say the least.