Barry Ritholtz has really been beating the table on the fact that there’s more to the current macro story than the one story everyone appears focused on – the fiscal cliff. In a story yesterday he outlined 5 other (equally important) concerns:
“As we discussed last night, it behooves investors to consider what else is driving equity markets. I can think of at least five factors:
1) Earnings are the weakest in 3 years
2) Portfolios have been poorly positioned for higher Capital Gains and Dividend taxes
3) Europe crisis unresolved, and getting worse
4) The 17% rally in first 3 quarters had markets ahead of themselves
5) The decreasing impact of Federal Reserve QE.
The fiscal cliff amounts to about $600 billion in friction spread out over the course of 12 months. Fair estimates are that it will cost about 0.50% off of GDP, now estimated to be about 2.0% for the calendar year 2013.
I submit that these other factors weigh at least as much, if not more, in the markets current action.”
So now the question remains – wall of worry for the market to climb or risk that are not yet priced in?