This ship is taking on water. When the obvious of US outperformance becomes so pervasive, you get money managers dumping Europe, Asia, anything but U.S. We have pushed the limits of the US outperformance trade and the strains are now evident. The symbols of US stock outperformance: AAPL, GOOG, and other tech darlings have been skinned. I am not calling for a top, just calling for a top in U.S. stock outperformance. The fiscal cliff will bring some reduction in deficits, and that trend of increasing budget deficits will not sustain, which will pressure U.S. corporate profits.
The fiscal cliff reminds us that the sole reason for U.S. outperformance is government/monetary policy. If you give people free money in the form of various tax cuts while adding pork stimulus, you can create a bull market. It has nothing to do with superior companies in the U.S. Europe didn't stimulate, and it has suffered as a consequence. You take away the tax cuts and deficit spending, and you have Europe in America.
Sell rallies till the words "fiscal cliff" bleeds out of your ears.
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