Over the weekend, a geopolitical black swan landed in the Mid-East where Saudi Arabia’s execution of a prominent Shiite cleric set in motion a series of events that led Riyadh to sever diplomatic ties with Tehran.

Protests broke out almost immediately after news of Sheikh Nimr al-Nimr’s death hit the wires. Tensions reached a boiling point on Saturday evening in Tehran where demonstrators torched the Saudi embassy. In Bahrain, angry Shiites burned tires and confronted riot police who used tear gas to disperse the crowds.

It didn't take long for the momentum-chasing fundamental strategists to readjust their immediate stock price targets on the heels of the i) failure of the Santa Rally and ii) the worst start to the year in Chinese stock market history.  Case in point, moments ago JPM's equity strategy team released its first note for the year in which it says that "we take the view that equities are unlikely to perform well on a 12-24 month horizon" adding that "the regime of buying the dips might be over and selling any rallies might be the new one."

• China stocks tank, triggers circuit breaker (Reuters)
• Stocks Slump Across Europe and Asia Following Shanghai's 7% Crash (BBG)
• China Halts Stock Trading After 7% Rout Triggers Circuit Breaker (BBG)
• Iran says Riyadh thrives on tension after relations cut (Reuters)
• Saudis and Bahrain Face Off With Iran in Worst Clash Since 1980s (BBG)
• Syrian rebel group backs Saudi move to cut ties with Iran (Reuters)
• Iraqi Sunni mosques attacked in apparent retaliation for Saudi execution (Reuters)

Happy New Year!

Last year (2015) likely will represent the top for the bull market that began in 2009. Stocks finished the year down, representing the first down year since the March 2009 bottom.

Many analysts will point to the August sell-off as the reason stocks performed so badly, however, looking at the chart, stocks struggled throughout the year, long before the August sell-off. Indeed, at best the S&P 500 was up 3% for the year!

Things are only going to worsen from here.

“The world is laughing at us, at our stupidity,” Donald trump told the Washington Post, in an interview on Sunday. “It’s got to stop. We’ve got to get smart fast — or else we won’t have a country.”

Those comments came as the GOP frontrunner gave the Post an exclusive look at his campaign’s first television spot, which is set to debut on Monday.