It's never just one thing but this was definitely one of the things

There is a laundry-list of reasons for the decline in equity markets this month and every day there is a new one:

  1. Higher bond yields

  2. Rising Fed rates

  3. A slowing US economy

  4. A peaking US economy

  5. Overindebted consumers

  6. The trade war

  7. Valuations

Yet they all suffer the same problem -- timing. All of those things were known at the start of October and yet it wasn't until the second week of the month that stocks began to roll over.

I'd argue that one of the big catalysts -- and we can argue about how big -- was Pence's anti-China speech on October 4. That day stock markets opened close to flat and tanked after his comments began to cross.

Yes, it was just talk but in the bigger picture if was a declaration of a new cold war.

As Jean Pisani-Ferry wrote on Friday, there is a big question about what is happening between the US and China. Is the US trying to discipline China and force it to play by the rules? Or is the US trying to roll back China and halt its progress.

The market had assumed the US just wanted China to play by the rules but the speech sounds like they want a strategic competition, if not full-blooded containment and a comprehensive economic de-coupling.

"Be assured," Pence said. "We will not relent until our relationship with China is grounded in fairness, reciprocity, and respect for our sovereignty."

Aside from the rhetoric in the speech, it came amidst reports that the US is on an information offensive against China.

At the moment, the market is terrified about a showdown between the US and China because we don't know what shape it will take. If and when that becomes clearer it could create the conditions for a rebound or a further breakdown.

But as I'm looking towards the next move, I'll be focused much more on US policy and rhetoric towards China than others, as I was from the start.