The Gods Are Getting Impatient

Here's what the market revealed this week: we've built an entire theology around central bank omnipotence, and now the congregation is starting to fidget in the pews.

Q2 GDP revisions came in hot—personal consumption resilient, private investment solid—and what did the faithful do? They immediately scaled back their expectations for Fed rate cuts, now pricing in just four by end of 2026. Treasury yields jumped. The story we've been telling ourselves about the inevitable march toward easier money hit a speed bump called "the economy is actually doing fine."

The S&P 500 punched through to fresh all-time highs on Monday, up over 2% for September—a month that historically bleeds portfolios dry. September is supposed to be when things go sideways. Instead, we're watching equities levitate on the thinnest of narratives: rate cuts are coming, growth is cooling but not collapsing, earnings are holding up, and somehow all of this adds up to "buy everything."

But here's where it gets interesting. Bitcoin is hovering just under $110,000, and traders on prediction platforms now see a 61% chance it dips below $100,000 before 2026—up sharply from last week's 41%. Bitcoin fell 5% over the past week, Ethereum down 13%, XRP shed over 9%. The crypto complex is starting to crack while equities party. That's not a coincidence. That's a Tell.

When risk assets diverge like this, someone knows something. Or everyone knows nothing and we're just watching liquidity slosh around like water in a bathtub. Crypto—the supposed inflation hedge, the digital gold, the revolutionary asset class—is getting sold while the Nasdaq prints new highs. Which means either crypto was never what we thought it was, or the equity rally is built on scaffolding made of investor complacency and central bank Put options that may not exist anymore.

The Fed already cut 25 basis points earlier this month, responding to what they called "concerning" labor market signals. That was the pivot everyone begged for. And now? Investors are paring back cut expectations because the data isn't cooperating with the dovish fantasy. We wanted easing. We got it. And now the market is repricing reality: maybe the economy doesn't need four more cuts. Maybe the Fed stops here. Maybe—and this is the scary part—inflation isn't actually dead yet.

Let's talk about what's not being said. We're in the longest period of "good news is good news, bad news is good news" market psychology I've seen in years. Strong GDP? Rally. Weak jobs? Rally, because cuts are coming. Strong jobs? Rally, because no recession. This is the kind of environment where risk gets mispriced in spectacular fashion.

You want to know what I think? I think we're in a liquidity trap disguised as a bull market. Everyone is positioned for the same trade: long equities, long duration, short volatility. The VIX is comatose. Retail is back in. Passive flows dominate. And the only question that matters is: what happens when the next exogenous shock hits and everyone tries to exit through the same door?

The crypto selloff is a warning shot. It's telling you that speculative fervor is cooling at the margins. It's telling you that when the easy money thesis cracks—even a little—the most leveraged, most narrative-driven assets get hit first. Bitcoin at $110k sounds impressive until you realize it was at $117k two weeks ago and the momentum has completely reversed.

Meanwhile, Treasury yields are climbing because the bond market doesn't believe in the four-cut fairy tale anymore. The bond market rarely lies. Equities can stay delusional far longer than bonds can stay irrational.

So here we are. September—historically the worst month for stocks—turning into a victory lap. Crypto bleeding out quietly in the corner. The Fed stuck between economic data that says "slow down" and market expectations that scream "don't you dare." And a global macro environment where every developed economy is trying to ease policy while inflation still lurks in the base effects, supply chains, and wage negotiations nobody wants to talk about.

If you're wondering what comes next, join the club. But I'll tell you what I'm watching: whether the equity market starts caring about rates again. Because if yields keep climbing and stocks keep rallying, that gap is going to close violently. Either rates come back down, or stocks come down to meet them.

And when that happens, we'll find out if the Fed's credibility—already bruised from the inflation fight—can survive another crisis of confidence. Because make no mistake, we've built this entire rally on the assumption that central banks will always step in. That's the theology. That's the faith.

The gods are getting impatient. And markets that forget their gods tend to learn painful lessons.