If you want to see the system breaking, don't look at stock prices (yet). Look at foreign exchange. The Bloomberg dollar index is 109.50. The euro is $1.024. The yuan is at 7.332. There's a global dollar shortage and a mad scramble for collateral. The one-month Treasury bill has a yield of 4.303% compared to the Fed funds target of 4.50%. The Fed is way behind the curve (no pun intended).

These and other markets are telling us that the global banking system is facing illiquidity, which is showing up in exchange rates and interest rates. This stress has not hit the stock market yet, but it will soon.

Source: Insider Intel