Let me pass on several other brief bullet points that suggest to me that the bulk (if not all) of the market's advance and upside might be over.
- President Obama seems likely to win the November election. (He has risen to a multiyear high of 58.7% on Intrade.) A Democrat win will be seen as business- and market-unfriendly). Despite the odds of a Democratic presidential win, the election appears to be a cliffhanger -- the closer the vote is, the greater the animosity between the parties and the steeper the fiscal cliff might be.
- Third-quarter 2012 earnings will be challenging (probably down 4%) -- guidance has been cautious -- and profits will likely decline for the first time (year over year) since third quarter 2009. For the full year, earnings in 2012 should be up 6% or 7%, but next year the gain will be between zero and 5%. So, we need P/E expansion for the S&P 500 to make further progress, and I don't see it. (Note: Intel (INTC - Get Report) warned this morning.)
- I remain uncertain about the U.S. fiscal cliff, debt ceiling, dividend, capital gains and tax policy.
- I remain uncertain about the eurozone's economy, banking union and fiscal integration.
- A Chinese economic slowdown not only threatens world economic growth and commodity prices but implies less demand for the purchase of U.S. Treasuries.
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