It is hard to believe the holiday season is already upon us and the New Year is right around the corner. It has been a tough year for investors even as the major indices are largely flat for the year. The only exception has been the NASDAQ which has posted returns in the high single digits thanks to the likes of Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN). Most stocks are down for the year as equity leadership has been very narrow in 2015.

We have seen a lot of blowups and underperformance from many sectors since the Federal Reserve took the quantitative easing training wheels off the market in November. The energy and commodity sectors have imploded as have the emerging markets economies of nations dependent on energy and commodity exports such as Russia, Brazil, and Argentina. This is also impacting Canada and Mexico, two of our top three trading partners.

This is one reason that transports are deeply underwater this year despite plunging fuel prices which are a major part of their operating costs. Small caps have also significantly underperformed their larger brethren in the S&P 500 despite much less exposure to the impacts of the stronger dollar and the weakest global economy since 2009. This is also the first time since 2009 that overall profits within the S&P 500 have fallen year-over-year.

I wish I could be more like jolly old Saint Nick this holiday season rather than sounding like Krampus. Unfortunately, the outlook for the global economy and the stock market is hardly rosy as we head into the New Year. The latest major concern for the markets that few retail investors are aware of is the turmoil in the high yield credit markets.

Credit spreads are widening as the collapse in the mining and energy production industries take their toll. Default rates for this $1.3 trillion part of the credit market has gone from 2.1% in 2014 to 2.6% so far in 2015. The default rate is projected to jump to at 4.5% in 2016 with over 10% of the total amount of high yield energy bonds expected to hit default status. Combined with major debt problems in Brazil, Russia, Greece, Portugal, Argentina, Venezuela, Puerto Rico, etc., the possibility that turmoil somewhere in credit markets spilling over to equities in 2016 is increasing significantly.