China

Surging volatility in global equity, currency, and credit markets and significant stress in a major world economy have George Soros on edge. Speaking at an economic forum in Sri Lanka, the billionaire hedge fund manager warned global markets are facing a crisis and investors need to be very cautious. On the heels of the second trading halt in four days, Soros exclaimed "I would say it amounts to a crisis... which reminds me of 2008."

American justice is a joke. It does not exist. The USA is a lawless country. By that we do not mean what conservative Republicans mean, which is, if we understand them, that racial minorities violate law with something close to impunity. What we mean is that only the mega-banks and the One Percent have legal protection, and that is because these people control the government. For everyone else law is a weapon in the hands of the government to be used against the American people.

Surely, The PBOC will step in at some point and save the collapsing currency? Nope - not if options traders (and Kyle Bass) are to be believed. The odds of the yuan breaking beyond 7 to the greenback by the end of March more than doubled to 12% (from 5.8% at the start of December). Ironically, Bloomberg reports only 1 of 39 analyst predicts Yuan to trade beyond 7 by the end of 2016. The market's extremely strong conviction, and apparent PBOC loss of control is "a dangerous situation for policy-makers" according to one Asian economist.

Gold has has been one of the best months for gold in terms of monthly performance in the last 10 years. Bloomberg confirms that today.

"We had a hard landing in the stock market already. We had a hard landing in commodities. [So yes], we could have a hard landing in the economy. China has a colossal credit bubble and no one knows how it's going to unwind."

Energy investors got clobbered in 2015, and are hoping for things to turn positive as we head into the New Year. What can we expect in 2016? Here is a rundown of some key trends to watch for...

Apple's shares broke below $100 in pre-market trading as analyst downgrades and further component producer outlook reductions weighed heavily on the "no brainer." It appears increasingly likely that Tim Cook's "rescue" email to Cramer on August was perhaps not the entire truth.. and the market is trading back to levels it first crossed in August 2014 (i.e. unchanged in 16 months). Of course, amid this carnage this morning, AAPL attempted to save the day and issued a quick statement proclaiming January 1st as the biggest App Store spending day in history... for now the stock is not excited about that.

• Today’s fixing was a big surprise, and impression is that upside risks to USD/CNY have grown
• PBOC’s actions are conflicting: there was suspected intervention yesterday and sentiment stabilized, but it set such a low fixing today
• Will help loosen monetary conditions; still, risk of capital outflows could increase concurrently
• Expect 5%-10% depreciation by end of the year, though this depends on the pace of PBOC’s intervention and health of macroeconomy

• Obama, wiping tears, makes new push to tighten gun rules (Reuters)
• Global stocks hit by China worries, North Korea nuclear test (Reuters)
• Oil hits 11-year low, Saudi-Iran row cuts chances of output restraint (Reuters)
• North Korea says successfully conducts first H-bomb test (Reuters)
• Valeant Planning to Appoint New Leader as CEO Remains Hospitalized (WSJ)
• Treasuries Extend 2016 Winning Start With Growth Outlook Clouded (BBG)

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.

Many people start a new year with renewed optimism. However, "New Year, Same Problems" is the meme of 2016... and recent trading has dashed some of that optimistic 'This time it's different' hope.

Dow futures are down over 170 points from the cash close, testing the lows of the day following carnage in the Chinese currency markets. Despite the biggest drop in onshore Yuan since August devaluation, Offshore Yuan has collapsed to its lowest since September 2010. What is more worrisome (or positive for Kyle Bass) is that the spread between onshore and offshore Yuan has blown out to 1250 pips - a record - indicating dramatic outflows and/or expectations of further devaluation to come.