Risk - Is it Being Priced In?

After an interesting afternoon in the hospital, I am going to attempt a recap of the days affairs and attach some opinions to them.


First off, equities took a breather today as they have been grinding higher.  I look at this action as rational and fully expect the market to trade down.  Snapshot of the equity market over the last week:

So, why do I think that the market should be headed lower?  Risk friends, its all about the risk.  Consider:

1. Libya is going to be anything but easy.  What to do after enforcing the UN no-fly zone?  Wait for the power vacuum if Gadhafi is removed.  This is long haul stuff that the US and Europe (and some Arab states) find themselves embroiled in.
2. Bahrain - Saudi forces in the country point to Saudi concerns about the country and the wider region - especially as Iranian influence is being seen behind the scenes.
3. Yemen - Saleh has resisted stepping down as calls for his resignation increase.  He has asked the Saudi's for help within his country as the Saudis play a role in the country and have ties to tribal leaders.
4. Increasing number of protests in Saudi Arabia itself.
5. Still uncertain outcome in Japan with their nuclear issues.  Power has been delivered, but do the generators work and can they cool the systems?  Will be days or weeks until we know.  
6. Irish stress tests - are we gonna see the $35B that was not going to be used get used?  How bad is it really?
7. Housing data came in bad - yeah, I know there is point to point volatility, but the bigger picture is not good.  At some point FNM and FRE are going to have to be dealt with.  Will banks step in?

Bottom line, I don't like the risk profile and I don't like how the market is somewhat shrugging off the risk.  I like (and am long) oil, think silver is still interesting, still like credit products (bonds and preferred) although they are getting heady as well.  New issue calendar has been robust as there are willing buyers - points to some upside (but not much from here).