Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Hedge fund manager Doug Kass seems to be turning more bearish “up here” – today on TheStreet.com he lists 12 events that could “crater” the stock market. Below are a few I’d like to highlight but follow this link for the full list and explanations.
1. Politics over here. President Obama’s Intrade odds of winning the presidential election in November exceeds 65% – it now stands at 60.5% – and growing evidence that the Democrats will lose control of the Senate. (On Intrade, the probability of a Republican-controlled Senatenow stands at 62%.)
5. Fiscal cliff. Actually experienced, a fiscal cliff dents the economy, threatens self-sustaining recovery and adversely impacts corporate profits and business/consumer confidence. (Mark’s note – as mentioned in the past on the blog and in this interview with Andrew Horowitz, I see no way our politicians don’t simply kick the can as they do on almost everything, and hence no fiscal cliff . HOWEVER, that is “then” and between here and “then” we have this summer and fall and there will be a lot of talk of it and potential worry about it in the late summer to fall)
6. Deflation. Commodities abruptly turn lower, more deflationary signals. (Mark’s note – Most commodities ex oil have acted horribly this year)
7. Strategists grow more bullish. Perma-bulls Abby Joseph Cohen at Goldman Sachs(GS) and Binky Chadha at Deutsche Bank (DB) raise their year-end S&P 500 targets. (Remember their ridiculously optimistic prognostications of 2008 year-end S&P 500 targets of 1650/1675? They were off in their forecasts by a mere 700 S&P points!)
9. Black swans. Any number of exogenous events — a Fed policy mistake, crude ramps in price, Middle East tensions escalate, China lands hard and pulls back from U.S. Treasury note and bond purchases (fueling a sharp rise in our interest rates), a large ETF blow up, another flash crash, Sears Holdings (SHLD) is forced to sell more stores (it employees 350,000 companywide) and so on.
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