Bulls at JPMorgan get an earful from Asia clients

The arbitrage system of Everbright Securities Company Limited encountered problems this morning, resulting in the benchmark Shanghai Composite Inde
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JPMorgan's relentlessly bullish view of the stock market and economy hasn't played very well during a recent visit the firm's strategy team has paid to Asia.

The firm has taken a positive view on the market for most of the post-financial crisis years, often at the forefront of amping up its price targets for the stock index, most recently to 1,775 by year's end.

But during a swing through Singapore, Tokyo, Seoul, Hong Kong and Beijing, chief market strategist Thomas J. Lee said in a note to clients that he and his team have heard a bevy of concerns and a "mixed reaction" from clients.

Those worries focus on a lot of the usual suspects: Potential escalation and U.S. involvement in Syria's civil war; withdrawal of Federal Reserve stimulus and what will happen when Chairman Ben Bernanke leaves, and worries over whether corporate earnings can continue to grow.

China market: 'Overbought begets overbought'

(Read more: S&P 1,900 possible in 12 months: JPMorgan's Lee)

More broadly, the Asian investors question the logic of expecting more gains from a market where the S&P 500 already has climbed more than 18 percent in 2013.

While the Syria problem has been put on the back burner thanks to a Russian peace plan and Fed policy is unlikely to change unless President Barack Obama comes up with a surprise nominee as Bernanke's successor, the earnings question is less settled.

Rock-bottom interest rates have helped corporate profits and stock market gains in a plethora of ways.

Companies have used the low rates to issue debt at a record-breaking clip.

Verizon broke a corporate record this week with a $48.9 billion offering, and investment-grade issuance is at $735.8 billion for the year, according to Thomson Reuters. Junk issuance totaled $279 billion for the first half alone.

Firms also have used Fed liquidity as a conduit to buy back shares—$55 billion just since the beginning of August, according to TrimTabs—which has in turn played a huge rule in boosting share prices.

(Read more: Why more companies are increasing their share count)

With the Fed trying to concoct a graceful exit from its $85 billion a month bond-buying program and, ultimately, to start raising rates off their current floor, the Asian investors wondered how much longer the buoyant corporate profit story could continue.

Projections for earnings are falling rapidly, with third-quarter profits now expected to rise just 3.8 percent. That's down from an estimate of 6 percent in early July and 9.1 percent in April, according to S&P Capital IQ.

Fourth-quarter profits are predicted to rise 10.2 percent, but that, too, has been on a substantial downward trajectory as companies adjust to a higher-rate environment.

(Read more: Where did earnings go? Profit outlook gets gloomy)

That puts a serious challenge to the margin expansion story that has been the primary catalyst of stock market growth since the March 2009 crisis lows.

None of that, of course, shakes JPMorgan, whose strategists assert that the market faces not the proverbial wall of worry but rather a "wall of indifference." (Interestingly, the firms' economics team cut its third-quarter gross domestic product forecast Friday from 2.5 percent to 2.0 percent.)

Thomas Lee, the chief strategist, believes cyclicals will benefit from investor skepticism, with an emphasis on technology, financials and healthcare.

"Investors are waiting for clarity on the noted issues in September, but because of that, we remain comfortable seeing positive risk/reward into that," he said. "A potential acceleration in (earnings per share) is not 'discounted' by the market and if, indeed, EPS accelerates, this should lead to a re-rate of equities."

By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.