There's only 16 trading days left in the year. Tuesday's action is a good reminder that with major indices essentially at historic highs, there is not much time to make a lot of money, but there is plenty of time to lose it.
It's a tough morning for global equities:
1) China's Shanghai Index closed down over five percent, the biggest one-day drop in about five years, as the government's clearing house has tightened the use of corporate bonds as collateral for short-term stock financing. The People's Bank of China will no longer accept bonds with a rating below AAA as collateral.
2) The yen strengthened, dropping below 120 to the dollar. This is the classic safe haven trade. This always is an issue since the yen carry trade, where investors buy yen cheap and invest the money overseas, is a major factor in global stock liquidity.
3) The continuing drop in oil is putting pressure on stock markets in the Middle East, with Dubai down about 6 percent, Qatar and Abu Dhabi down about 3 percent.
Also keep an eye on tangential commodity plays like Royal Bank of Canada, which has been heavily involved in financing western Canadian oil exploration.
Even the euphoria around low oil and the boost to airlines may be fading. Raymond James downgraded Spirit Airlines, saying lower oil will be only a limited help to profits.
4) Europe is weak on heavy volume, with Greece down more than 10 percent.
Euro zone finance ministers extended Greece's bailout program two months. The Greek prime minister has called for a no-confidence vote on Dec. 17 in order to get the opposition anti-EU party Syriza out of the way and then move ahead with reforms. However if he loses the vote, general elections will come quickly; that is the source of the anxiety. Syriza is leading in the polls.
While the move down in oil is no shock, today's surprise announcement from China PBOC and the Greek no confidence vote is a reminder that tail risks are still very present.