Markets In Turmoil August 5, 2024

Hello my friends today is August 5th and this is an emergency market update today with such an exciting day in markets I figured that we needed an emergency update Now it looks like we're ending the day at about 3% down for the S&P 500 not too bad But honestly, it wasn't always like that Now the first thing I do every single day when I wake up is I reach from my phone and I check the markets And let me tell you I turned it on this morning. It was It was not down 3% Looking at the NASDAQ futures some few 500 futures or four or five percent almost 6% for the NASDAQ futures at some point it was kind of scary actually but not anywhere near as scary as At Japanese investor would have felt Because the big news today wasn't actually in the US. It was in Japan

你好，朋友们，今天是8月5日，这是一个紧急的市场更新。今天市场如此激动人心，我觉得有必要进行一个紧急更新。 现在看起来我们今天收盘时，标准普尔500指数下跌了大约3%，情况还不算太糟。但老实说，早些时候可不是这样的。我每天早上醒来后的第一件事就是拿起手机检查市场情况。告诉你吧，我今天早晨打开手机时，市场可不是只下跌3%。 查看纳斯达克期货和标普500期货，它们下跌了4%或5%，纳斯达克期货一度接近6%，这其实有点吓人。但与日本投资者感受到的恐惧相比，这简直不算什么。 因为今天的大新闻并不在美国，而是在日本。

You had the Nikkei their major stock market index down 12% now 12% that is a legit stock market crash That is something that should not happen That is when you should have everyone panic what we see in the US not so much I Think it's largely just Re-reborations of what happened in Japan now as we've been talking about on my Saturday updates a couple really big trades The market was in has been unwinding the past week one of course is the yen carry trade and the other is the short ball trade Now the yen has been appreciating against dollar pretty significantly over the past two weeks and On Friday we had big appreciation market sold off and the Nikkei futures were also sharply down lower

你看到日经指数（日本主要的股票市场指数）下跌了12%。现在，12%是一个真正的股市崩盘。这是一种本不应该发生的情况，在这种情况下，大家应该恐慌。然而，在美国我们看到的情况并没有那么严重。我认为这主要是日本市场动荡的连锁反应。 正如我们在我周六的更新中讨论的，有几个非常重大的交易正在市场中展开并逐渐退场。一个当然是日元套利交易，另一个是做空波动率交易。近两周，日元兑美元显著升值。周五，日元有大幅升值，市场抛售，日经期货也大幅下跌。

Now it's always hard to know how much leverage is in the system how much it needs to deliver But it looks like Friday was not enough because when the Tokyo markets opened the yen further appreciated immensely and the of course as we mentioned the stock market sold off a lot now in the global markets everything is connected through the balance sheet of global investors, so what does that mean so If you are a Japan based investor You you know likely hold a global portfolio of equities own Japanese stock You own us stock and so forth and so when you are Japanese stocks are imploding you have losses and Usually you are a levered trader. So that's how it works. Usually if you are a large institutional investor So what happens you have to cut down your positions? You have to deliver because there's more volatility in the market and that means selling a lot of stuff Mostly whatever is liquid that could be the S&P fire in Madrid Which is one of the most of the most liquid equity market in the world It also means things like gold and maybe on the margins even stuff like crypto And so again if you have a stock market crash in Japan, it's going to impact global markets through the portfolio holdings of global investors

现在很难准确知道系统中有多少杠杆，以及需要多少去杠杆化。但看起来上周五的情况还不够，因为东京市场开盘后，日元大幅升值，而且正如我们提到的，股市大幅下跌。在全球市场中，一切都通过全球投资者的资产负债表相互连接。那么这意味着什么呢？如果你是一位日本的投资者，你可能持有一个全球股票组合，既有日本股票也有美国股票等等。所以，当你持有的日本股票崩盘时，你会有损失。而通常你是一个杠杆交易者，这对大机构投资者来说尤其如此。那么会发生什么呢？你必须削减你的持仓，需要去杠杆化，因为市场波动性更大，这意味着要卖掉大量资产，主要是那些流动性强的资产，比如全球最具流动性的股市之一的S&P 500指数。此外还包括黄金，甚至在某些情况下可能涉及加密货币。因此，如果日本的股市崩盘，它会通过全球投资者的资产组合影响全球市场。

Now the same thing in the US member Friday Even as Japanese investors were asleep and you have a lot of US investors investing in Japanese stocks selling the yen When they get hit they also have to deliver and they also hold a whole bunch of stuff So what you're seeing right now is just white-celled Delivering of of a lot of people and this has a cascading impact Because let's say that I'm an investor and I hold a whole bunch of Japanese equities US equities when I sell to raise cash Because I'm afraid or I need to make margin payments that act of selling Pushes down the prices of financial assets, which of course may reduce the Net worth of another investor and force them to sell as well and then they sell the price goes down further you have these Delivering cycles that are honestly very common throughout finance throughout history. So this is totally normal

现在在美国的情况类似，也是星期五。即使在日本投资者睡觉的时候，美国的投资者也在大量投资日本股票，并且抛售日元。当他们受影响时，他们也必须兑现手中的资产。他们还持有一大堆资产。所以你现在看到的就是很多人在抛售资产，这具有连锁反应。比如说，我是一个投资者，我持有大量的日本股和美国股，当我因为害怕或者需要缴纳保证金而卖出资产以筹集现金时，这个卖出行为会压低金融资产的价格，当然这也可能减少另一位投资者的净资产，并迫使他们也开始卖出。然后他们再卖出，价格就会进一步下降。这些抛售循环在金融史上是很常见的，所以这完全是正常的现象。

I guess whatever one wants to know is When does this Ellen stop? now, I don't know and honestly, I'm surprised it continues so much because a Lot of these big investors big brokerage houses. They have pretty tight They have pretty tight risk limits so risk management is super important for any institutional investor And so after having the big losses through Friday I would have thought a lot of them have delivered if not, I'm pretty sure I'd have to get out today so I Don't think there's all that much of delivering from that trait to do honestly if you Honestly, you've already sustained such huge losses. I can't imagine a risk manager and not cutting down losses by now Now that leads me to an update on the other trade we talked about now Let's look at the VIX now the VIX was actually another thing that totally totally Scared many market participants now intraday We saw the VIX surge to as high as 60 now that is a really really high number

我想大家想知道的是：艾伦什么时候会停？我也不知道，说实话，我对它持续这么久感到惊讶。很多大投资者和大经纪公司都有相当严格的风险限额，所以风险管理对于任何机构投资者来说都是非常重要的。在经历了周五的大亏损后，我本以为他们中的很多人已经平仓了，如果没有，我觉得今天肯定会有平仓的。所以，我认为这笔交易的平仓额实际上并不会有多大。如果你已经遭受了如此巨大的损失，我无法想象一个风险经理现在不去减少损失。 现在，我来更新一下我们之前讨论的另一笔交易。我们看看VIX波动率指数。实际上，VIX波动率指数是另一件让许多市场参与者感到非常恐慌的事情。在交易日内，我们看到VIX指数飙升至60的高位，那是一个非常非常高的数字。

Now if you zoom out a bit historically this only happens when we have tremendous crashes For example when we had in March 2020 now intraday VIX sold off a lot from 60 back down to 30 Which is more in line with what you would expect for a market that is going up and down 2-3 percent now That tells me that again you have all these guys who are shorting vol who are you know selling insurance Collecting pennies in front of a steamroller those guys really got squeezed They really have to cover and when you cover of course you're buying VIX and that sparks a huge huge rise in volatility so Yeah, are those guys done delivering? I have no idea, but really it's it's hard to imagine someone Being able to hold such a large spike in volatility again This is just one second of the market you have all these other guys who let's say because volatility is higher They have to adjust their positions. Maybe they're not done delivering So it's a it's a complicated ecosystem. It's not super clear

从历史来看，如果你稍微放宽视角，这种情况通常发生在我们经历巨大崩盘时。比如在2020年3月，当时VIX指数在盘中从60大幅回落到30。这更符合市场上下波动2-3%的情况。这表明那些做空波动率、即卖出保险赚取小利的投资者受到了挤压，他们不得不回补仓位，而回补时就会购买VIX，从而引发波动率的巨大上升。所以，那些投资者是否已全部交割完毕？我不确定，但很难想象有人能在这样的波动率大幅飙升中坚持住。这只是市场的一个瞬间，因为波动率升高，其他不同的玩家也需要调整他们的头寸。他们可能还没有全部交割完毕。因此，这是一个复杂的生态系统，并不是特别明确。

That being said though now even though I view fundamentally what's happening in this entire sell-off as just a large scale Delivering which is something we see over and over again It's also something that I think changes psychology of the market and so I think that extends the Extends a time frame for us to recover because we have taken some Some damage in the markets. So I look at this in a couple ways First off again if you have a lot of people who lost a lot of money Obviously, they're going to be a lot more Redicent they're less reluctant to go and now go risk on again and more importantly their portfolios are much smaller And so they have less Assets to go and lever up. It's just a mechanical thing So the capacity of the market to to further climb is hindered when you have these big drawdowns Secondly now the bearish people to the extent that there are bears that survive the tremendous rally we've had throughout the year They're going to be looking at Opportunities to sell because from their framework. They'll be thinking that yeah, you know what? I think the market is going down bear market. We're all going to implode by gold by guns by stuff like that So that's one thing as well

话虽如此，我现在认为，这次大规模抛售事件的根本原因是市场在进行大规模去杠杆化，这是我们经常看到的情况。我认为这次事件改变了市场的心理，这也延长了市场复苏的时间框架，因为我们在市场上确实遭受了一些损失。我从几个方面来看待这个问题。 首先，如果有很多人赔了很多钱，显然他们会更加谨慎，不太愿意再次冒险。更重要的是，他们的投资组合规模要小得多，因此他们拥有较少的资产来进行杠杆操作。这只是一个机械性的影响，因此，当你经历了这样的巨大下跌时，市场进一步攀升的能力会受到限制。 其次，尽管今年我们经历了极大的上涨，但仍然有一些看空的人幸存下来。他们会寻找卖出的机会，因为在他们的框架里，他们认为市场会下行，进入熊市，他们会建议大家去买黄金、买枪、买其他物资。这也是一个需要考虑的因素。

Now the good news is that if you look at these huge surges in in volatility They usually Usually again go down slowly volatility historically if you look at that chart comes down slowly in a corresponds with gradual rises in the in-risk assets Now to be clear Volatility tends to cluster. So when you are in a volatile regime I use tend to get bigger volatile moves big updates big down days and so forth looks like we should get Some meaningful bounce simply because we've down been down so much but this volatility takes some time to I Guess calm down now historically again. Just look at the VIX over the past few decades It takes time to come down. It usually does and that usually corresponds to a rise in risk assets, but it takes time

现在有一个好消息，如果你观察这些巨大的波动激增，它们通常会慢慢下降。从历史来看，波动性按照图表显示是逐渐下降的，并且通常伴随着风险资产的逐步上涨。需要明确的是，波动性有聚集的趋势。所以当你处于一个波动性的环境中时，往往会有更大的波动，包括大幅上涨和大幅下跌。从目前的情况看，因为我们已经经历了大量的下跌，所以应该会有一些有意义的反弹。不过，这种波动性需要一些时间来缓解。从历史数据来看，只要看看VIX指数在过去几十年的表现，波动性确实需要时间来下降。这通常会伴随着风险资产的上涨，但这个过程需要时间。

Okay, a couple other things I think are worth noting is that we also got economic data today And again, it's positive economic data We got the services PMI services is the largest part of the US economy and services PMI really are quite good continue to show expansion and the employment sub component also Continues to show expansion as well. So the underlying economic Conditions of the economy by all again GDP growth looking at PMI data and so forth seem to be okay Now the last thing I think it's worth noting is how the Fed will respond to this so First off if you think it is going to be an emergency rate cut you need to wake up That is not going to happen. The Fed does have emergency cuts sometimes That's usually when the world is really falling apart like we saw in the the pandemic in 2020 Three percent drop from the for the S&P 500 is not an emergency For context the S&P 500 is still up around nine percent year to date so I Don't see the reason for an emergency cut and we had some Fed speakers Basically, honestly downplayed the weakness in the employment report on Friday

好的，还有一些值得注意的事情。今天我们也获得了一些经济数据，而且这些数据是积极的。我们得到了服务业采购经理人指数（PMI），服务业是美国经济中最大的组成部分，而服务业PMI的数据确实相当不错，继续显示出扩张趋势，就业子指标也继续显示出扩张。因此，从GDP增长和PMI数据来看，经济的基本状况似乎还不错。 最后一件值得注意的是美联储将如何回应这一局势。首先，如果你认为会有紧急降息的情况，需要醒醒，这不会发生。美联储确实有时会进行紧急降息，但那通常是在世界真的陷入困境的时候，比如我们在2020年疫情爆发时看到的情况。标普500指数下跌3%不算紧急情况。要知道，标普500指数今年迄今仍然上涨了大约9%。所以，我看不出有紧急降息的理由。我们也有一些美联储官员发言，他们基本上淡化了周五就业报告中的疲软表现。

My best guess is that we are of course embarking upon a rate cutting cycle And I wrote about why and to what extent in my piece today but We are at five and a half interest rates and there's a lot of room for the fed to cut and that's something that we haven't had over the past Decade we're at zero rates Going for five and a half percent down to zero or three or two or whatever That is a lot of potential stimulus for the financial markets because it's going to significantly raise the market value of fixed income assets and that gives investors More net worth and more collateral to pledge to lever up. So I think we are in a very different situation again I don't believe This is the beginning of a bear market or anything like that But I think the damage today is significant and It will take time for us to work through and again Looking through time. It's There are still many favorable things in the economy and in the sense of monetary policy that are supportive But again, we're early in the week. Let's see how the rest of the week turns out. I'll be back on Saturday for markets weekly. All right guys Be careful out there.

我猜我们正进入一个降息周期。我在今天的文章中写了为什么及其程度，但目前利率是5.5%，美联储有很多降息的空间，这在过去十年中并未出现。从5.5%的利率降到0，或者3，或者2，这对金融市场来说是一种很大的潜在刺激，因为这将大大提高固定收益资产的市场价值，进而增加投资者的净资产和能质押的抵押品。所以，我认为我们处在一个非常不同的局面中。我不认为这是熊市的开始，但今天的冲击非常显著，需要时间来消化。展望未来，经济和货币政策方面还是有很多积极因素的支持。但这只是周初，让我们看看这一周的表现如何。我会在周六的《市场周刊》中再见。大家注意安全。