The first quarter of 2016 saw the continuation of a steep market correction in larger cap U.S. equities and an outright bear market in global equities and small cap stocks. The S&P 500 fell by 12% from the end of the December to the low in mid-February, before rebounding all the way back to flat by the end of the quarter. Small cap stocks and international stocks fell more (17% and 14%, respectively) before recovering about the same amount (12%), leading to net losses of 3-4% for these asset classes. It is worth noting that small cap stocks have been sliding for over a year now in parallel to rising high yield credit spreads, leading to a small cap stock decline of 26% by February from prior highs. International stocks have similarly been churning in a southerly direction, and reached a 25% loss from 2014 highs in February. We expressed concern in our 2015 year-end letter that stocks of all types were unlikely to stabilize until high yield credit stabilized. High yield dislocations have been dominated by energy and other commodities, and these too bottomed around mid-February. Consequently, oil prices, high yield bond prices, and global equities all bottomed within hours of each other. Cross-asset class correlations have seldom been so high aside from major and more newsworthy market events.