The Dow: Political Risk and Earnings Risk

In the wake of the U.S. Federal Reserve's QE3, the Bank of Japan is now expanding its asset purchase and loan program by 10 trillion yen to 80 trillion yen -- roughly $1 trillion. (Numbers enthusiasts: Japan's public debt is now 1 quadrillion yen.) Little surprise, then, that gold hit a six-and-a-half-month high earlier today of $1,779.10. Gold ETF holdings hit an all-time high of 73.7 million ounces this week; the largest ETF is the popular SPDR Gold Trust (NYSE: GLD  ) .

Gold's performance is not just about global monetary easing, I suspect. Political risk has made a forceful resurgence in the headlines in the past week, between protests in the Middle East and anti-Japan protests now spreading across China.

Global shipping and logistics giant FedEx (NYSE: FDX  ) announced yesterday its results for its fiscal first quarter ending in August. The company managed to beat estimates by $0.05, but it took an axe to its full-year guidance, reducing it to between $6.20 and $6.40 from a previous range of $6.90 to $7.40. This is consistent with my thesis that 2013 earnings estimates will need to come down across the board, which will be a headwind to continued gains in the S&P 500 (INDEX: ^GSPC  ) and the Dow (INDEX: ^DJI  ) .