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The Dow: Political Risk and Earnings Risk

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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  ) .

Fool contributor Alex Dumortier holds no position in any company mentioned. Click here to see his holdings and a short bio; you can follow him @longrunreturns. Motley Fool newsletter services have recommended buying shares of FedEx. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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Today's Market

updated 20 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

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Related Tickers

10/21/2016 4:47 PM
^DJI $18145.71 Down -16.64 -0.09%
^GSPC $2141.16 Down -0.18 -0.01%
S&P 500 INDEX CAPS Rating: No stars
FDX $170.20 Up +0.50 +0.29%
FedEx CAPS Rating: ****
GLD $120.83 Up +0.09 +0.07%
SPDR Gold Trust CAPS Rating: **