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Bank of America has a nice note on the biggest risks to the current bull market and why they’re growing increasingly concerned about the potential for a second half slow-down in the USA (via Zero Hedge):

Risk #1: Oil prices

At this stage we consider the risk of higher oil prices – due to an escalation of the nuclear stand-off with Iran – as the biggest risk to our outlook between now and the middle of the year.

Risk #2: Europe

Until the PSI this was #1. However, clearly important risks remain both in the short and long term. What we as credit strategists are most concerned about is eroding/lacking public support for the fiscal checks and austerity programs that are being implemented across the Euro-zone. We are particularly concerned about the peripheral countries where unemployment rates are very high. Even if governments support unpopular austerity agreements, there is high risk that sitting governments may lose power to oppositions that are less committed.

Risk #3: US economy

To us, the US economic risk appears more back-loaded toward the last part of the year than of immediate concern. In fact, due to automatic fiscal tightening to the tune of about 4.5% of GDP in 2013, our economists have an out-of-consensus outlook for a slowdown in economic growth to 1% in 4Q, as companies anticipate the tightening.

Risk #4: China

China is a perennial constituent of our list of biggest risks. However, as usual we put this risk toward the end – not because of a small expected impact but because it is less likely to materialize this year. Early this week the markets were spooked by China lowering its official GDP growth target for the year to 7.5% from 8.0%.

Read more at Zero Hedge.

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