Market Winds Stall

From the Wall Street Journal, we see that the market has given back seven months of gains in a day. Well, a day does not a correction make, but at least some cautious sentiment is taking hold.  Looking back at some recent points, what still looks concerning?

• According to Fed presidents, the labor markets remain weak, unhealthy, in flux or whatever euphemism is acceptable to the Yellen regime. [Despite the recent job numbers, and the trend of a few months nobody is willing to declare victory yet]
• The housing "recovery" has stalled, weakened, sputtered.[No change here.]
• The Fed won't tie monetary policy to rules, but some Fed Presidents feel that rates may rise sooner rather than later. [The confusion and dissonance among Presidents continues]
• Our larger, more concentrated banking sector is shelling out billions in shareholder equity to the government without admitting any crime they've committed.  Meanwhile, their fundamental businesses, with some lending growth, are lackluster.[Still in place: look at Bank of America]
• Trading revenue continues to flounder for the investment banks.[Bank of America excepted: probably a timing issue]
• Top line revenue continues to be hard to come by, and earnings gains continue to be of low quality, especially in the tech sector, where retirement plan commitments are excluded from "normal" earnings.[IBM's ninth consecutive quarter of declining revenue from core businesses and low quality EPS; the $20 per share "earnings road map" number has been dismissed as meaningless as a barometer of fundamental future prospects]

In Europe, all our points remain in place and some look worse on recent news:

• Germany's Chancellor getting ready to impose sanctions.
• Elysee Palace will impose sanctions and export restrictions, but they will not impact the export of Mistral systems to Russia.
• Sanctions will take some time to gain traction.
• Is Britain part of Europe? Jury still out.
• Daily operations at Banco Espirito Santo even worse than anyone expected.  Board and management were unaware of assets and balance sheet commitments. Inquiries underway. 
• Europe was 'cheap' and getting 'cheaper.'

The Middle East will be descending into a more complex maelstrom, which the U.S. does not understand. Israel must complete whatever action it is contemplating against Hamas soon. Sentiments pro-Israeli military action and pro-Hamas are both increasing: not a stable outlook.