Most middle class who have 401Ks are probably happier to see oil prices and the stock market going up and the dollar going down rather than vice versa. Their 401Ks are still down quite a bit more than higher oil prices will hit their pocketbook in the near term and I don’t know too many Americans who really care what the value of the dollar is so long as there is no domestic inflation beyond energy prices.

Do you have any concern that the first quarter earnings season is being front-run before it even starts? Looks like the S&P500 may very well end the year at about 1150-1160. How much potential upside is there beyond that, maybe 1,200 for 1Q? Timing that market based on earning surprises didn’t work as well in Q3 as in Q2. It might even be less fruitful in Q4.

It seems to me that in Q1 the dollar and interest rates will have at least as much influence on market direction and the magnitude of the move(s) as earnings will.

Key questions: Will the 10YT hit 4% and reverse or go higher? Has the dollar reversed its brief rally or will the rally continue in the new year? Will the Fed really end its MBS buying in March as promised? Who will buy MBS if not the Fed? How high can mortgage rates go? How high do mid-long interest rates need to go before investors are lured from stocks to bonds based on return potential?