My top ten reasons to be scared:
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1. Terrorism of the home-grown variety in a post 9-11 USA will have a major cost on the psyche and wallets of Americans and investors.
2. Yesterday's global bounce was hardly resounding and on small volume after a massive 93% down day on Monday on the NYSE with heavy volume. Metals are still getting no love, and Europe today is dealing with French and German downgrade rumors.
3. The IMF downgraded global growth yesterday, only solidifying fresh growth fears. The European Union (EU) is contracting again, and every CEO I have spoken to tells me that they expect nothing out of the EU for 5 years.
4. Earnings coming through are beating the bottom line but missing the top line.
5. Korea, in a word; and if you think Korea is creating tension, the Middle East is a mess (again) and the Palestinian prime minister's resignation is being overlooked as a destabilizing force. As well, there was Israel bombing activity last night, although I'm not saying they are related.
6. Volatility is still too low.
7. Bank of America ( BAC , quote ) misses on mortgage income at a time when U.S. banks should be minting money, or at least getting a "dead cat bounce" in US Housing. As well, yesterday's housing numbers were not as impressive as they appeared.
8. Italy holds elections this week, although German elections in September are the big event.
9. Risk/reward for markets at these levels is very questionable, even for emerging markets which have largely missed this rally (namely, those other than Turkey, Mexico, Philippines, etc).
10. The US Dollar is lurking.