Some apt observations on the morning after the biggest VIX move in history (in percentage terms) by Bloomberg macro commentator and former Lehman trader, Mark Cudmore, who has certainly been here before.

There’s More Pain to Come for Global Equity Markets: Macro View

There’s been a rapid deterioration in market fundamentals and that means that, even at these much lower prices, global stocks don’t look attractive yet.

It’s true global growth is still supportive, and so this is unlikely to be the start of a long-lasting bear market. But, one of the other pillars behind the rally has been severely weakened during the past month: liquidity.

Two-year U.S. yields closed Thursday 90 basis points above their finish on Sept. 8. That speed of tightening hasn’t been seen since the first half of 2008. And we all know how that year ended.

There’s more from this angle: five-year U.S. yields also tightened by more than 90 basis points over the same period. That has severely diminished the net-present value of expected future cash flows from stocks, effectively making them look more expensive on this basis.

And now we also have an explosion in volatility. That will have a lasting impact on VAR (value-at-risk) calculations, sustainably reducing potential leverage levels for both banks and hedge funds for the rest of this year. Another severe blow to liquidity.

This is all coming amid a flurry of data and metrics showing how January was a record month for equity inflows and bullish sentiment across a number of markets. There’s far less cash on the sidelines to buy the dip than there was only a few weeks ago, which again hurts the liquidity support.

To top it all off, the main reason I suddenly turned bearish last Wednesday, remains worryingly valid. It was the first time in many years that regular bears weren’t getting excited by a 1.8% fall in stocks. That suggested investors were too complacent then, and they’re still too complacent today.

Until yields fall further, investors deleverage more and we see a preponderance of bears openly roaming, we can expect to see lower equity prices. That all may happen very quickly, but it needs to occur before we find a base.

One extra warning: Don’t get too excited if we get a big bounce soon. Risk-averse markets see the most powerful short-term swings in these sorts of conditions, when liquidity is lower and wealth destruction means many traders have weakened hands and reduced conviction.