NASDAQ

My overriding theme and the central drama for the coming year is that unexpected events can take on greater importance as the Federal Reserve ends its near-decade-long Zero Interest Rate Policy. Consensus premises and forecasts will likely fall flat, in a rather spectacular manner. The low-conviction and directionless market that we saw in 2015 could become a no-conviction and very-much-directed market (i.e. one that's directed lower) in 2016. There will be no peace on earth in 2016, and our markets could lose a cushion of protection as valuations contract. (Just as "malinvestment" represented a key theme this year, we expect a compression of price-to-earnings ratios to serve as a big market driver in 2016.) In other words, we don't think 2016 will be fun.

This, ladies and gentlemen, is what "trading" has become.

In the world of fiction, the most famous threshold may be that of 88 miles per hour. In the non-fictional world of economics and finance, however, an even more important threshold is that of 5% unemployment. At that moment everything changes. Wall Street's most prominent former converted permabull, Jim Paulsen, explains.

America's equity markets are broken. Individuals and institutions make transactions in rigged markets favoring short-term players. The root cause of the problem is that stocks trade on numerous venues, including 11 traditional exchanges and dozens of so-called dark pools that allow buyers and sellers to work out of the public eye. This market fragmentation allows high-frequency traders and exchanges to profit at the expense of long-term investors. Mr. Lewis was right.

"... this until recently bankrupt company whose price has exploded in the past two days, has become not only a poster child for everything broken and manipulated with the market (think 2014's CYNK one year forward) but has the market following with morbid to find out how the tragicomedy of "Shkreli vs the Shorters" concludes." - November 20, 2015

Now we know precisely why management, not just BBBY's but every other company, was so eager to engage in record buybacks. Without them, the stock would have been at today's price long, long ago.How many buybacks? The chart below shows the average buyback price since the last time BBBY traded at $49. The answer: $67.44.

And the hits just keep on coming for "America's most hated" biotech CEO-cum-charged with fraud hedge funder, Martin Shrekli, who several days after resigning as CEO from Turing Pharma, has just been fired by his "other" recent infamous investment KaloBios, which as a reminder was trading at $1 just over a month ago when it had announced it would liquidate just before Shrekli invested several million in the insolvent biotech.

Commodities managers searched in despair; for solace, in cupboards, but cupboards were bare; BRIC managers looked at each other in shock, with a new acronym for EM markets – COCK.

"It is time once again to seek the safety of the sidelines. This is not the time to be aggressively bullish of equities but rather this is the time for… as we say here in the South… “hunkering down,” for getting smaller, for curtailing exposure."

Who could have known - the worst terror attack in a decade was "not" a buying opportunity after all...