A financial crisis spreads just like a virus does. The contagion equation is the same. Shifts in narrative/confidence can cause fear to spread quickly – sometimes creating the bad outcome it’s afraid of (e.g., a run on the bank). Or sometimes the opposite (e.g., asset bubbles). The Fed pivot narrative brought a lot of capital back into the market, which resulted in the July rally. But the “logic” behind this narrative wasn’t necessarily correct. But it drove prices higher…until Powell brought the hammer down at Jackson Hole. The fundamentals can’t be dismissed no matter how much the market would prefer they could. The markets are dreaming of a ‘soft landing’, but Jim thinks it’s going to be more like a plane crash. The rate of change of the Fed Funds Rate is staggering. Never has it risen by such a big % this fast. This WILL shock the system. For example, bonds & housing are going to get clobbered. The damage these fast-rising rates are going to cause is going to be severe.