Last Chance for a Pre-Christmas Fiscal Cliff Deal

By Lloyd Khaner  DEC 18, 2012 1:50 PM

Investors are not ready to count their deals before they're hatched.


MINYANVILLE ORIGINAL It’s hard to focus on a self-made budget tiff with the tragedy at Sandy Hook Elementary School forcing true perspective on us all. This week’s Wall of Worry is dedicated to the good people of Newtown, CT. Our single most important worry is for your well-being.
As for the financial markets -- Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) -- it is more of the same. We are in the home stretch for pre-Christmas fiscal cliff deal and hopes are rising once again. We at the Wall would love a settlement but as it’s our job to worry, we’re not ready to count our deals before they’re hatched. The sides are moving closer and it looks like it's now a matter of both of them being willing to give and take regardless of potential political fallout. Fingers crossed.
We of the over-active amygdala (thought to be the part of the brain that registers fear and worry among other emotions) set want to bid a final adieu to the Mayan 2012 calendar worry. Remarkably it doesn’t make the Wall this week as no one seems to care anymore and lately a new end of days date prophesized by Sir Isaac Newton was found that gives us until 2060 to enjoy the planet. Meaning we have 48 years to save the Earth or in US government time, the last seven weeks of 2059.
Happy holidays, my fellow worriers.

Click on the link below for an interactive version of the Wall of Worry or scroll down for the text-only column. Also see "What is Lloyd's Wall of Worry?" below.



Lloyd's Wall of Worry  (Text-only)

QE: More QE from the Fed -- are you serious? Bottom-line, “It’s simply irresistible…”
US ECONOMY: Just strong enough to not be completely obliterated if we go off the fiscal cliff. Whew!
UNEMPLOYMENT: Jobs added, unemployment rate down. "It’s a miracle, a true blue spectacle, a miracle come true…”
INVESTOR SENTIMENT: All gifts of stocks this holiday season will be returned for cash. Please include receipts.
HOUSING CRISIS: Mortgage deduction on the table in the US budget talks. If we lose the first mortgage deduction in the US budget talks, we may just lose the housing rebound with it.
EUROPEAN ECONOMY: Hearing from some that it could be better than people expect next year. Well. let’s friggin’ hope so!
A distressed Cyprus calling. Is anyone going to answer?
SOVEREIGN DEBT: Looking like the must-have gift this holiday season for global macro hedge funds .
SPAIN: Empty houses and now empty bank branches, as it looks like thousands will be shut down over the next year or so.
VOLATILITY: Seemingly has flat-lined. This at first strikes me as a good thing. Then I looked up the definition of “flat-line” and then, not so much.
Lloyd: Vacation this holiday season?
HAL: Heading out to Silicon Valley to see the family.
Lloyd: Stressful.
HAL: Gotta do it. My mom’s turning five years old. May be her last.
CHINA: PMI reading hits 50.6 in November, matching the year’s previous highs -- kinda like clockwork.

STOCK MARKET TECHNICALS: “All I want for Christmas is a breakout move, a breakout move, a breakout move…”
GLOBAL ECONOMY: Starting to hear a lot of “less is more” regarding GDP growth in 2013 from countries like China. My response: "Sometimes less is less.”
RETAIL SALES: Coming into the home stretch, heading for the Christmas finish line! I've gotta tell you, I barely remember this race starting at all. More of a jog than a sprint this year.
JAPAN: When a negative 3.5% GDP number is not a major disappointment, you got problems.

THE CLIFF: “As time goes by…”
GREECE: About to become a worry for another day. Just when you think you’ve seen everything…
DRAGHI: Saved the eurozone in 2012. Global markets are looking for more of the same in 2013.

ITALY: Mario Monti (the other Mario in Europe) is calling it quits after pulling his country back from the abyss. Shouldn’t someone send him a one-way ticket to the US right about now, hmm?

DEBT CEILING: Will Congress pull the pin on the US default hand grenade this time? Don’t know, but they have their finger through it already.

GERMANY: Economic slowdown coming a bit too close to home. Suddenly eurozone debt restructurings don’t look so bad.
VOLUME: “Si-lent market, ho-ly market…”

MIDDLE EAST: The good news is that it’s running out of new flashpoints. The bad news is that all the old flashpoints are still flashing.

US CONGRESS: The ultimate decision: Spending Christmas with the family or negotiating with the other political party? Tough call.
US PRESIDENT: A full plate just got a lot fuller. Thoughts and prayers are with you, Sandy Hook.

What Is Lloyd's Wall of Worry?
by Lloyd Khaner

Welcome to my at-a-glance guide to the issues facing investors this week -- a unique tool for traders and money managers.

Typically the term "wall of worry" refers to the entire body of concerns influencing stock market action. When the wall is high, meaning the market is nervous, stocks tend to get cheaper.

This wall of worry is even more specific. Every week I list the exact concerns in the marketplace and use the list to help me make buying and selling decisions. As I like to say, "Buy fear, sell cheer."

In other words, once the the wall rises above 15 blocks, start looking for deals. If the worry count sinks below 10, consider selling; prices have likely peaked.
No positions in stocks mentioned.

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