... and boy was it an epic flush: everything - like literally everything - and certainly anything with a high beta or even a trace of momentum, imploded with a sheer violence that made Aug 5 look like amateur hour. And unlike Aug 5, the puke was only at the beginning with stocks spiking from the first moment of trading, this time it was the other way around, with stocks pushing higher to start the day before falling apart, and ending a catastrophic week in the worst way possible: on a downtick.

It all started with the August payrolls: as described earlier, the number wasn't terrible: at 142K, it missed the estimate of 165K but rebounded sharply from last month's (downward revised) 89K...

... and the unemployment rate actually dropped...

... as the number of employed workers jumped by the most since March (even if the composition was terrible, consisting entirely of part-time, illegal workers).

Yet, while on the surface the jobs number was strong enough to eliminate the odds of a 50bps rate cut, the market did not take it that way - perhaps as a result of the massive historical revisions - and odds of a 50bps cut in two weeks first spiked, before reversing... only to spike again after Fed gov Waller said he would "advocate" front-loading rate cuts if that is appropriate, wrong-footing markets again, and sending odds of a 50bps cut as high as 65%... before a tweet from the WSJ's Fed leaker Nick Timiraos interpreted the Fed's speech as much more hawkish than it appeared, saying that "Fed governor Chris Waller's speech doesn't explicitly say "25" or "50" but it leans into endorsing a 25 bps cut to start, explicitly reserving the option to go faster "as appropriate" if "new data" show more deterioration."

He also said that "Waller pats the Fed on the back for not overreacting to the banking crisis, the lower inflation prints of 2H 23, the higher prints of Q1 24. Then he says, "Based on the evidence I see, I do not believe the economy is in a recession or necessarily headed for one." So after all that, we saw what may have been a rate expectation reversal for the ages, with odds of 2 cuts first jumping from 40% to 60% before reversing back to 40%, only to surge to 65% before finally plunging to 25%, all in the span of a few minutes!