Where are the losses?
This is the most-levered market in history. We all know the math of a 33% loss at 3:1. But what if you're at 50:1 and can't get out?
There are huge losses out there and the panicky Fed operation sounds like something to step the tide. A $500B three-month loan gives you time to sell difficult-to-move assets or collect an liquid debt.
The losses in European equities today are absolutely staggering and the risk isn't about coronavirus right now, it's systemic. Everything the ECB did was generally expected and European banks crumbled afterwards and that shows that someone wanted/needed more.
A day like today reminds me of the EUR/CHF crisis and how we lost a few brokers after the close.
Even if the Fed saved the day, you have to wonder how the market responds if whatever is going on leaks out.
At the same time you have upside risks. Heck, even if there is no news after the bell, that would be a big piece of good news. Plus, I'd put the odds around 80% that the Fed cuts rates today. I don't think that's going to change the tide of this market move but it might spark another squeeze.
