NEW YORK (Real Money) -- Below are 12 events that could crater the U.S. stock market:
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 Senate now stands at 62%.)
2. Politics over there. Eurozone tail risk reemerges. François Hollande wins French presidency and disrupts EU bailout efforts. (Current Ladbroke odds have Hollande at 1/8, Sarkozy is 9/2.)
3. Interest rates. The 10-year U.S. note yield drops below 1.90%. (It now is at 1.99%.)
4. Economic. High-frequency economic data deteriorate, and odds of a recession grow in the U.S. Signs emerge that China and India will land hard.
5. Fiscal cliff. Actually experienced, a fiscal cliff dents the economy, threatens self-sustaining recovery and adversely impacts corporate profits and business/consumer confidence.
6. Deflation. Commodities abruptly turn lower, more deflationary signals.
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!)
8. Housing. Home prices and sales activity move lower over the balance of the year, negatively impacting consumer confidence and spending.