When I woke up, I vaguely smelled the eve of the crisis

When I woke up, I vaguely smelled the eve of the 2007 financial crisis.

Important signals from three major markets:

- The U.S. stock market did not hold up, and all three major stock indexes showed considerable declines. The Dow fell 1.3%, erasing all of this year's losses; The S&P 500 fell 1.4%, with nearly 13% of its constituents hitting a 52-week low; The tech-heavy Nasdaq fell 1.9 percent.

- At the same time, U.S. Treasuries suffered a massive sell-off, with the 10-year yield topping 4.8% for the first time since August 2007. The Treasury rally was initially spurred by higher-than-expected job openings data in August, followed by a further sell-off as futures volumes surged and the market hit new lows.

- The U.S. dollar index climbed further, posting its highest close of the year and firmly above the 106 mark.

Just by looking at the above three paragraphs, you should understand the seriousness of the situation.

First, the U.S. stock market has seen a significant decline, and today's Asia-Pacific stock market sell-off is expected to intensify further. The reason why everything feels good now is because the US stock market has not yet experienced a big decline. The VIX, known as Wall Street's "fear index," recorded its highest closing level since May 24, and volatility is expected to intensify further.

Second, the yen briefly fell below the 150 level against the dollar, then rose by almost 2% in seconds, adding to the turmoil in global markets. However, Japan's intervention will only moderate the decline of the yen and put a short-term pressure on the dollar, and will not really change the trend.

| The movement of the yen has all the characteristics of intervention, otherwise it must be an incredible coincidence.

Third, traders are digesting the signal that the Fed will keep interest rates high for a long time, which is the source of all the current turmoil, and what we have been reminding in Global Markets Strategy for months that our forecasts for the dollar and Treasury yields have all come true. Now that the 10-year U.S. Treasury yield has exceeded "4.8%", as the "anchor" of global asset pricing, many financial markets and emerging market countries cannot afford such high yields. In addition, this yield is pegged to inflation expectations, and if it causes inflation expectations to rise, then the Fed will be forced to raise interest rates – financial accidents if interest rates continue to rise the way they used to. Something will break down, which will cause the Fed to turn in the other direction. The probability of a rate hike for the November and December meetings is now further increasing.

Fourth, it now resembles the atmosphere before the 2007 financial crisis:

- The Fed is about to end its rate hike cycle;

- Strong labour market;

- Increased expectations of a soft landing – Every time a crisis strikes, there is a strong expectation of a soft landing.

The dangerous situation continues. Unlike past crises, this time the market was accompanied by a combination of simultaneous increases in the dollar, crude oil and Treasury yields, which is a toxic combination for both the economy and the financial markets.

The atmosphere has been set here, and calm is impossible.

Recently, some readers left a message that "there is no need to interpret the market every day, the intermediate process is not important" - this is the public's thinking cognitive bias. The market is constantly changing, and we need to keenly capture each change node, judge the short-, medium-, and long-term impact of important events that occur every day on the financial market, and evaluate the cumulative effect of these events. Most people are stuck at extremely low levels of awareness, and many are still struggling to bet on whether the Fed will raise interest rates in November, and Wall Street has long since turned. If you're obsessed with a few tips (or indicators) to be invincible, you're not even a supporting player in the market.

| If you come across this book in the early days of trading, you are undoubtedly very lucky, and for many people it is the dividing line between the first half of life and the second half of life.