This is a pickle wrapped in a conundrum surrounded by a puzzle, or something like that. The Fed declined to hike rates, which everyone thought was bullish, and then stocks got on the vomit comet. They've been going down on an elevator ever since.

I think what's interesting here is how shamefully far behind the Fed is on this. Dudley is out there still talking rate hikes. Like, just the other day. He has gone right out of his tree. It's almost as if he lost his B-Unit and can't log into Bloomberg.

It was like this in the financial crisis, too. The Fed was very slow to act. It is a known fact that the Fed has never forecasted a recession (in spite of employing hundreds of nerd economists whose job it is to do precisely that). They don't even react to them very well. I'm not certain we'll get a recession, but the Magic 8 Ball says, “It is decidedly so.”

Like junk bonds, for example.

Credit spreads tend to be the best capital markets indicator of bad juju. The underlying bonds are even worse than the ETF. There are bonds that are gapping 10 points lower at a time. There is no dealer participation. We are going to get hung bridge loans. Some of the larger deals are troubled.  It is a mess.

My guess is that over the course of the next few weeks, the Fed is going to change their minds on rate hikes. Maybe they have already. It's been my view that they won't hike until 2017. I still believe that to be the case. I think you and I know what the Fed is going to do better than the Fed itself.

There are some people who think we're FUBAR, that the Fed is out of ammo and we just have to get run over by the Mack truck because we can't hike rates anymore, and what good is QE going to do, anyway?

Well, the one thing QE did was to raise asset prices, which happens to be the thing that currently ails us.

But remember, the Fed has all kinds of tools that haven't even been explored yet.