As there has been all year, there is considerable hostility to the continuing rise in stocks. Now the argument is that the Santa-Claus rally will fail because the Federal Reserve rally last week has taken away much of the rally that would normally occur at the end of the year, and because yields on the 10-year Treasury, and the middle of the Treasury curve, have been rising.
I don't know about stocks swooning. Two of the major near-term uncertainties have been resolved: 1) The Fed has begun its tapering program, and 2) the Senate has passed a two year budget deal.
We also have leadership continuity at the Fed with Janet Yellen's pending confirmation.
For stocks, I see...
If this is right, calling for a sudden swoon in stocks is kind of risky.
The big X-factor for stocks is not so much the economy...it's QE and rising rates. We all know that. Everyone--friend and foe of QE--agrees that the market is higher as a result of QE2 and QE3, but no one knows how much.
In informal discussions with dozens of traders in the past year, the typical answer to the question, "How much higher is the Dow due to QE2 and QE3?" has been, "One to two thousand points" (six to 12 percent at today's price, but seven to 15 percent by the price in mid-year).
That does not seem unreasonable. But things are different from a year ago...the economy is showing signs of improvement. Does that matter?
I think it does. Could it be that a modestly rising 10-year yield on relatively low inflation might not be a disaster for stocks, or for earnings, in an improving economic environment?
Bottom line: My bet is that the Fed may have begun tapering, but it will remain highly accommodative, and an improving economy will provide a modestly supportive backdrop for stocks. And if the economy does not show measurable improvement in the next months, the Fed will simply suspend its taper program.
—By CNBC's Bob Pisani