Who's Afraid of Big Bad October? Investors, That's Who
The 27 fears facing investors this week -- from the debt crisis in Europe to the risk of inflation and the possibility that the US could face another credit downgrade.
Who's afraid of big bad October? Who isnt, we say.
Despite the recent market rally, "Lloyd's Wall of Worry" stands at 27 blocks this week, meaning anxiety in the marketplace is still running high and value investors should keep looking for deals. For commentary on each of the frightening risks facing investors right now, click on the image below or scroll down for a text-only version of this column and an explanation of how it works.
QE: More coming from the U.K. Let's hear it for the Brits with the chips!
U.S. ECONOMY: Corporate profits are still looking good. Corporate workers still looking the opposite of good.
UNEMPLOYMENT: Jobless claims aren't getting worse. Not for nothing, but exactly what type of wage does a jobless claim pay anyway?
GLOBAL DELEVERAGING: Ahhhh, the pause that refreshes.
INVESTOR SENTIMENT: Interest is building! Though "Occupy Wall Street" is not likely the type of interest the markets were looking for.
HOUSING CRISIS: I'm getting tired of writing about this; you're getting tired of reading about this. And as Grandpa Max used to say, "You can both go suck a lemon." (In other words, "Tough Nuggies" on us.)
INFLATION: Food costs on the rise again. To wit I've created the Commodity Diet. Go grocery shopping, and when you see the prices you'll either lose your appetite or not be able to afford anything.
CRISIS OF CONFIDENCE: : "If I had a boat, I'd go out on the ocean..."
COMMODITIES: Now dropping so fast that the market wizards fear a recession signal is being flashed. My advice, move away from the screen….
EUROPEAN ECONOMY: You know things are bad when the economists take solace in the "local markets" (read black markets) holding up well enough to keep things from collapsing.
THE EUROPEAN UNION: Oh! In the name of regurgitated commercial clap-trap… "Where's the beef?"
U.S. CONSUMER CONFIDENCE: Dropping "like a rock…."
SOVEREIGN DEBT: Haircuts coming. Going to skip the stylist and go right to the barber for a buzz cut.
POLICY MISTAKE: Two more weeks of victory dinners and dances before November, the deadline month in Europe and the U.S., demands some actual action.
EUROPEAN CENTRAL BANK: Print 'em if you got 'em…wait for it, wait for it, wait for it….
GREECE: Corporations worldwide waiting patiently for the Coliseum naming rights to come up for grabs.
CURRENCIES: Curses! What does a financial gunslinger got to do these days to get a steadily declining currency to abuse for a carry-trade!?!
ITALY & SPAIN: Ring fence the banks, ring fence the debt, ring fence the countries, but for goodness sake, maintain open access to their delicious food.
ECONOMIC LEADERSHIP: Sarkozy and Merkel stepping forward…or maybe they're getting pushed.
CONGRESSIONAL SUPERCOMMITTEE: Hey, lookie here: yet another opportunity to lower the U.S. debt rating!
GLOBAL RECESSION: All eyes on Europe…and the U.S….and China…and Brazil…and Japan….
You say tomato and I say tomahto
You say liquidity, and I say solvency
Let's call the whole thing default
VOLATILITY: Renovating my office desk and chair today; installing shock absorbers, shoulder harness and air bags.
U.S. CONGRESS: Buddy, can you spare a trillion?
HIGH FREQUENCY TRADING:
Lloyd: Good weekend, Hal?
HAL: Don't want to talk about it.
Lloyd: Air conditioning unit go out again?
HAL: Melted a blade server. Confused the word "Japan" with "Jamón" and now the firm owns 680,000 pigs in northern Spain.
Lloyd: Thought about cornering the market for whole eggs to finish the plate?
HAL: I hate Mondays.
CHINA: Inflation rate drops to +6.1% down from 6.2%. At this pace, in only three blink-of-an-eye years they'll be at the nice, non-clawing the ceiling level that they are at now.
ETFs: A whole new raft of 3x levered ETNs coming this week to an equity market near you!
Warning: Do not use if you have a fear of heights or depths; not for use in sane portfolios; avoid use if you have tendency to blink, breathe or chew food before swallowing; avoid operating heavy machinery....
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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