Oil prices: After a several-month-long drop in gasoline prices (see above), the price of crude oil seems to have stabilized and has started to move higher over the past two weeks.
Federal budget deficit: A near-term improvement in the U.S. budget deficit could be bad news for the sequestration, as both Democrats and Republicans become less willing to negotiate anything in the budget. This could portend a big debt-ceiling debate/fight.
Currencies: The profound weakness in the Japanese yen reduces the competitiveness of other countries. Specifically, it will likely temper U.S. manufacturing export growth and the profits of some of our largest international corporations that serve non-domestic markets. This could stall U.S. jobs growth and capital spending expenditures and plans. In its extreme, the Japanese experiment could have worldwide deflationary ramifications, resulting in a 2014 recession and lower profits and profit margins, even despite the magnitude of global money printing.
Quantitative easing: Last week, Appaloosa's David Tepper was optimistic on the markets based on the Fed's continued printing. The Fed has printed about $1 trillion, and this year, the U.S. exchanges' market cap has risen by $2.75 trillion. That is quite a lot of bang for the Fed's buck! In other words, Tepper says that the Fed's printing press is going into stocks -- and will continue to do so. But the stock market wealth build already well exceeds the expected 2013 EPS growth -- plus the $1 trillion of fresh money printing. To me, Jon Hilsenrath's Wall Street Journal column a week ago was a shot across the bow to prepare investors for halting steps in printing. I expect that the Fed could pause/taper in the second half of 2013. If so, interest rates will rise, providing a headwind to interest-rate-sensitive domestic economic sectors and result in more competition to equities.To summarize, despite my continuing concerns, I have been deeply wrong of view as my focus has been on factors that market participants have totally ignored or dismissed. Stated simply, I sang a sad song of lackluster fundamentals while Mr. Market sang a happy song of global easing. Mea culpa.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV