Hey, Congress: Wake Me Up on Judgement Day

By Lloyd Khaner  DEC 31, 2012 12:25 PM

If not for the fiscal cliff crisis, Mr. Market would have reason to be in a much more cheerful mood.


MINYANVILLE ORIGINAL So this is what it comes down to. Many economic indicators peaking up, and some even popping up, but it all may not be enough if the leadership in the US leaves us wanting on the budget, the debt ceiling, and whatever else they decide to turn into a political football. We are left to sit and watch and wait and wonder. But should we really be so surprised? Democracy is cyclical, cyclical good and cyclical bad. For now, we are in the latter part of the cycle, and it is probably best to expect more of the same for a while.
Just to give the US economy its due, things are better than they have been in a while. Spanning the globe, it's looking like China has stabilized, Japan has decided to go all in on currency debasement and inflation creation, and Europe is focused on regaining its place in the global economic landscape. Things could be a lot worse -- a lot, lot worse. The citizens of the economic world are doing their best; let’s hope our leaders can do their best as well.
My advice is to enjoy a nice New Year’s celebration and then to rest up as 2013 should give us many "Buy fear, sell cheer" opportunities. In the long run of investing, that’s really what it’s all about, anyway.
Happy New Year, fellow worriers.
Click on the link below for an interactive version of the Wall of Worry or scroll down for the text-only column. 

Lloyd's Wall of Worry (Text version) 

Just in case QE Infinity isn’t enough. Let me offer up for your consideration the term “Meta QE Infinity” to describe the next incarnation.
US ECONOMY: Looking like half of a nicely built sand castle. Just waiting for a mindless bully to wipe it out with one stupid kick.
UNEMPLOYMENT: Hard to get an accurate number in the US. Do you include the members of Congress?

INVESTOR SENTIMENT: On the sidelines, but warming up. Must be time for a market correction.

HOUSING CRISIS: Some saying it’s over. My guess is that “some” haven’t tried selling a house lately.
EUROPEAN ECONOMY: Only two countries with unemployment rates over 25%, so all in all, I guess 2012 was a success. Can you set the bar any lower?
“One life, but we’re not the same, we get to carry each other, carry each other, one, one…”
SOVEREIGN DEBT: One of the best performing “assets” of 2012. Now I’ve seen everything… again.
SPAIN: Still trying to get up the guts to ask for big money help, but why do today what you can put off until absolutely the last minute before financial collapse?
VOLATILITY: It’s back, but mostly overnight and during weekends. Wonderful.
Lloyd: Happy New Year, HAL.
HAL: Happy New Year, Lloyd.
Lloyd: Some people think algorithmic trading is ruining the markets.
HAL: And therein lies the problem with people. You think too much.
CHINA: Getting their mojo back. And America, you can’t have any.

STOCK MARKET TECHNICALS: Looking a bit heavy. Feeling even heavier.
GLOBAL ECONOMY: The positive news flow is that expectations are coming down.
RETAIL SALES: Talk about a lousy Christmas sales season. I didn’t even get a lump of coal.

JAPAN: Considering buying the debt of weak countries to weaken its own currency. Imagine if their plan backfires and their purchases are profitable.

THE CLIFF: “…Yes, it’s the last dance, last chance, for love…”

GREECE: Treacherous economy, unemployment, and prospects -- or in short form, unchanged.
DRAGHI: Bigger bag of tricks may be needed in 2013.

ITALY: Berlusconi looking to make another run at prime minister in 2013, making this political system potentially the first to become a full-fledged reality TV show.

DEBT CEILING: I hated this movie the first time and the sequel is likely to be equally unsatisfying.
VOLUME: There ain’t no “11” on this dial. Starting to wonder if there is even a “2.”

US CONGRESS:  These politicians give politicians a bad name. 
US PRESIDENT: Put away the picnic blanket. You won’t need it during the next four years.

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.

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