The Committee to Destroy the World opened is hydra-headed mouth one too many times last week. The result was the biggest drop in stocks since Brexit.

The Dow Jones Industrial Average (DIA) fell nearly 400 points or 2.1% on Friday while the S&P 500 (SPY) dropped nearly 54 points or 2.5% and the Nasdaq Composite Index (QQQ) also shed 2.5% and nearly 134 points.

What was the monumental news that finally rattled investors?

Was it the latest nuclear test by North Korea, which experts now believe could have the ability to reach the U.S. mainland with nukes by 2020?

Was it the overt disrespect shown to President Obama by Chinese and Philippine leaders?

Was it weeks of lousy economic data?

Or the prospect of the most depressing presidential choice in generations?

Turns out it was nothing of the sort…

This Is Terminal Complacency

It was nothing so much as the mere whisper by one of the clueless members of the clueless Federal Reserve that the august group of former tenured economics professors working 24/7 to destroy the global economy might raise interest rates sooner than expected by whopping 25 basis points.

This is worse than pathetic.

It gives the lie to all those stock market bulls claiming that there is anything other than easy money holding up overvalued markets.

Imagine what is going to happen if these whispers turn into action, and the Fed actually summons the long overdue courage to hike rates.

The rush for the exits will resemble 10 pounds of baloney trying to squeeze into a five pound bag.

The Fed whispers (by normally dovish Boston Fed President Eric Rosengren) followed the European Central Bank's decision not to intensify its quantitative easing and low interest rate policies.

Perhaps the ECB saw a ghost after two large European corporates were able to raise money at negative yields, the first time that such an abomination of nature has ever occurred.

While such bonds are designed for economically insensitive buyers like the ECB itself, no doubt some idiots in the private sector offered to subsidize Corporate Europe.

The fact that ECB inaction bothers investors more than negative rates tells you all you need to know about how the world was driven to the edge of a cliff by flawed economic theories and short-sighted investors.

Bonds also sold off but primarily at the log end of the curve.

German 10-year bunds returned to a positive yield and Japanese bonds continue to sell off and push back up to zero. Think about that carefully for a minute.

Central banks succeeded in destroying global bond markets; patching them back together is going to leave a lot of blood on the streets.

Get Ready for a Return to Volatility

Whether Friday's sell-off is the end of the unprecedented period of low volatility they we saw this summer remains to be seen.

The VIX popped five points (40%) yesterday to 17.50 but is still below its long-term average of 19 or so.

Volatility, like interest rates and all measure of risk, remain grossly undervalued. September and October can be among the cruelest months for investors.

Buckle your seatbelt – and load up on gold.