Well, the world didn't blow up. Despite the world seeing its fair share of fucked up disasters this year already. I happen to enjoy life, and a functioning society. But going with the end-of-world theme, lets look at real viable systemic threats that can take us one step closer to a non-functioning society, which would equate to the end-of-the-world, at least as we know it.
1. An abruptly restructured European debt. (Or the PIGS kicked out of the Euro.)
Greece alone may not cause the crisis, but as the dominoes fall, the combination would. A credit crisis would happen, and the financial system would have to get saved again. Fortunately, Portugal got the loan this weekend, Ireland is making progress and Merkel voiced her support to all of Europe (ie Greece).
The powers-that-be seem like they are doing everything in their power to prevent a systemic issue, and I think they will succeed. In the mean time, mid-to-late June we will see the progress report on Greece.
2. The debt ceiling not being raised.
Sheila Blair, Tim Geithner, Jamie Diamon, Warren Buffett and many other prominent figures did not mince their words, not raising the ceiling will be catastrophic. The political tit-for-tat is childish. But really, does the current political leadership want to be the 'assholes' that cause America to default on its payments, remove its triple A status and unquestionably accelerate its decline from the economic status we currently benefit from?
Well, who wants to be the asshole?
I do not think any of the (relatively) smart leadership wants to be the asshole, so I think it will be raised. They have until Aug 2nd to decide not to be the assholes.
3. Arab Spring.
An entire region of the world is shifting toward a truly democratic way of life. It is quite beautiful to witness the people taking charge of their destiny, but the images and stories make it hard to watch. The ton of uncertainty caused the market to flat-line in late Feb as people demanded more in Libya.
Syria does not look to be budging anytime soon, but Yemen hopefully shows promise. Hopefully progress is made to unleash the true potential of the regions people, as democracies usually do.
The only time this will pose a very real threat is if protests Saudi Arabia cause oil disruptions. The threat of this can cause shocks to the system. (But they seem to have things under relative control. Hopefully, the Monarchy is smart and gradually shifts control toward a Parliamentary system, similar to Great Britain.)
4. Natural Disasters.
With the market funk caused by Libya, the nuclear issue in Japan caused the market correction in March. They are still dealing with cracks in the reactors, and this weekend we got two new ones. The volcano in Iceland erupts again, and another quake off Japan's coast. These look to be less severe, and hopefully they say that way. Lets not forget about the floods and the tornadoes in the south/mid west.
No one can control or foresee natural disasters, relatively speaking. We can only be prepared for the worst, and wish/pray for the best.
Four issues that cause macro-economic uncertainty are a lot for a given period of time. Especially when the first two are in the hands of political leaders. The global economy is flexible enough to with stand a level of geopolitical turmoil and natural disasters. I can even say it is flexible enough to absorb some political stupidity. But there is only so much it can take. Some of the uncertainty has to be removed.
Right now, the very low multiples are suggesting we will enter a new recession, even though the 10yr is not. (Or the low multiples are a tremendous buying opportunity for a lot of names.) IMO, the only way we enter a new recession is if there is a systemic hit to the system. I only see two legitimate reasons for that, the first two listed above.
So, who wants to be the asshole? We will see in June and by August.