NASDAQ

As Wall Street axioms (Santa rally, January effect, as goes January etc.) are rapidly falling by the wayside at the start of 2016, following a chaotic but return-less 2015, the UBS analysts who correctly forecast last year's volatility are out with their forecast for 2016. It's simple - Sell Stocks, Buy Gold... expect a Fed u-turn.

But, but, but... it's not a market-driven only by The Fed, right?

Before we go into details of the overnight carnage, this is where we stand currently: S&P futures now down 33 points or 1.63% while 2Y Treasury rallies pushing its yield back below 1% as EU stocks extend their drop after China weakened its currency, North Korea says it tested a hydrogen bomb; Brent crude falls to lowest level since 2004.

Derivatives like credit default swaps turned a mere bubble in the US housing market into a global financial catastrophe... 

The one thing executives should have learned in 2015 is that Wall Street can for long periods of time remain disconnected from fundamentals and can swing to extremes. Another lesson from 2015 is that OPEC can no longer be relied upon to set prices. Thus, the debt fueled financing boom in the shale space will most likely never return.  This is especially true now that there are clear signs that the U.S. economy is weakening while the Fed chose to raise the federal interest rates in December. As we move through 2016, expect a rash of bankruptcies tied to this transition to lower leverage, and towards the latter half of 2016 there will likely be a steep fall off of production.

There’s really one supreme element of this story that you must keep in view at all times: a society (i.e. an economy + a polity = a political economy) based on debt that will never be paid back is certain to crack up. Its institutions will stop functioning. Its business activities will seize up. Its leaders will be demoralized. Its denizens will act up and act out. Its wealth will evaporate. Given where we are in human history - the moment of techno-industrial over-reach - this crackup will not be easy to recover from. Things have gone too far in too many ways. The coming crackup will re-set the terms of civilized life to levels largely pre-techno-industrial. How far backward remains to be seen.

An 88-page "Research Note" from the SEC's Division of Trading and Markets titled "Equity Market Volatility on August 24, 2015," outlines the facts of that fateful trading day, discussing what went wrong, and which classes of securities were affected. The conclusions of the piece are purely factual, with little or no conjecture, and there's absolutely no policy recommendations. There are dozens of unintended consequences already baked into its proposed rulemaking. That's bad enough when you're talking about the inner workings of mutual funds and ETFs; it's a bigger deal when we're talking about the inner workings of the markets themselves.

It all started off relatively well: oil and US equity futures were buoyant on hopes Iran and Saudi Arabia would break out in a bloody conflict any minute boosting the net worth of shareholders of the military industrial complex, and then, out of nowhere, like a depressed China in a bull shop, the "mainland" crashed the party and it all well south very, very quickly...

As go the markets, so go the movies. According to the WSJ, Hollywood just had its biggest-ever year at the box office in 2015, collecting $11.1 billion in ticket sales, up 7% from the previous year and surpassing the record of $10.92 billion set in 2013. All of the growth, however, occurred at the top of the heap, or in other words, 2015 was a record year "thanks to a handful of blockbusters that left a whole lot of duds in the dust." In other words, just like in the stock market, a record high portion of Hollywood "gains", or rather box office ticket sales, came from just five movies.

Comcast is penny wise, pound foolish.

Thus ends KaloBios' "turnaround in progress" - two months after it was dragged out of bankruptcy by Martin Shkreli in an attempt to crush the company's shorts and unleash a massive squeeze, Kalobios is again, well, bankrupt.