The Fed
Several monetary policy makers, including San Francisco Fed President John Williams (who is reportedly close to Janet Yellen), struck a hawkish tone at the regional bank’s symposium.

Also, Cleveland’s Fed President Loretta Mester sounds very hawkish and has openly argued that the Fed should turn a blind eye to the stock market (the rotated voting membership this year has a slightly more hawkish tilt than it did in 2015).

Finally, there was nothing out of Fed vice chair Stanley Fischer to suggest that the Fed is going to stop at one or two hikes.

The Fed has never hiked rates with the ISM manufacturing moving below 50, let alone for two straight months now. This a transition, first away from quantitative easing, and now away from zero interest rate policy, but with a twist since the central bank has never tightened policy with manufacturing under so much duress.

Earnings
The consensus is looking for around 8% S&P 500 earnings growth this year and yet the analysts have dragged the earnings revision ratio down to the lowest levels in eight months (to 0.55x for the three-month ratio in December from 0.58x in November and 0.74x in October; declining now for four months running).

Another transition will be what rising wage growth will do to profit margins – a case of what is good for Main Street may not be so good for Wall Street (call it mean reversion from the past six years of 18% equity returns and a mere 2% growth trend in the broad economy).

Local Politics
Another transition this year is the U.S. election this November and if Byron Wien is prescient on his “surprise” pick for the Republican nominee being Ted Cruz, and the Democrats take over control of the Senate – well, it will likely be tough to build a positive market view from such heightened uncertainty.

As well, Donald Trump is not going out with a whimper either – there may be blue-collar voters who would be happy if he became President but I’m not sure the stock market would take it well (ditto for Ted Cruz with a Democratic-controlled Senate ushering in more years of gridlock).

China
While I am personally not bearish on the economy, it remains a “show me” situation and many pundits are becoming concerned over possible capital flight from any additional yuan devaluation.Also, signs that the rebalancing from fixed investment and industrialization towards the consumer and services may not be going as smoothly as earlier believed are unnerving investors too.

Europe
There is uncertainty over how the influx of migrants will affect Germany; how the U.K. will vote on the European Union referendum; signs of foot dragging from Greece on pension reforms; and secessionist pressures surfacing in Spain.

The European Central Bank is at or near the bottom of the barrel when it comes to monetary easing at this point – the laws of diminishing returns may be setting in.That said, some of the recent data flow has been encouraging.

Japan
Uncertainty in Japan regarding the efficacy of Abenomics and whether the Bank of Japan has done enough, notwithstanding how aggressive it has been, to fully thwart the ongoing deflation threat. But at least the latest recession last year managed to get revised away.

U.S. Growth
While autos, housing and consumer spending are doing fine, exports, commercial construction, transports and manufacturing clearly are not.

That the Atlanta Fed’s GDP “nowcast” is tracking growth for Q4 at a 0.7% annual rate, down from 1.3% just a week ago and 2.0% back in mid-December – that is a sharp downdraft in a short time frame.Manufacturing may only be 10% of GDP, but it does touch a lot of other ancillary sectors and only six of 18 industries polled by the Institute for Supply Management posted any growth at all in December.