Only a short-covering rally on Friday saved stocks from a truly horrendous performance last week.

The Dow Jones Industrial Average (DIA) lost 231 points or 1.4% to close at 15973.84 on the week while the S&P 500 (SPY) dropped 15 points of 0.8% to end the week at 1864.78. The Nasdaq Composite Index (QQQ) fell 0.6% on the week to finish at 4337.51.

All three indexes are solidly in the red for the year with the Dow down -8.33%, the S&P 500 down -8.77% and the de-FANGed Nasdaq down -13.38%.

Investors should take little comfort from Friday's rally – Chinese stocks reopen on Monday after a break for the Lunar New Year's celebrations and Japan's markets are in free-fall, losing 11% last week.

u.s. markets will be closed on Monday for the three-day weekend but the blood sport will begin again on Tuesday…

Central Bankers Unmasked

It appears that investors are finally losing confidence in central bankers. It is about time.

Last week's Congressional testimony by Fed Chair Janet Yellen was an opportunity to study just how clueless the head of the Federal Reserve is about all things economic.

The only people more ignorant about how the economy actually works than Mrs. Yellen are the members of Congress, whose stupidity was on full display.

It is hardly surprising that investors are losing their nerve with these people in charge and Donald Trump and Bernie Sanders giving a serious run at the presidency.

In a world desperate for serious leadership and reeling from seven years of policy failures from the Obama administration and the Bernanke and Yellen-led Fed, they are wise to be dumping their stocks and junk bonds and moving into Treasuries and cash.

We Haven't Seen the End of banks' Troubles

The selling has taken on a more disturbing tone of late by affecting more systemically sensitive sectors such as banks.

Now, U.S. banks are well capitalized and should not pose a systemic risk… unless their derivatives books blow up.