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Big Week of Economic Numbers, but Do They Matter?

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With the fiscal cliff question looming, investors are finding it difficult to worry about other important indicators.

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MINYANVILLE ORIGINAL ISMs, payrolls, PMIs, factory orders, credit, comfort, and confidence numbers are all shooting through the economic fire hose this week... but with the fiscal cliff in the mix, does any of it really matter? In the short-term, probably not; in the medium- to long-term, it's all about the numbers, baby.

As of "going to print" time (just some props for the pioneers of news), we have seen some good economic reports and some less-than-good economic reports. The point is that while no one cares at the moment, the moment that they will care is out there in the not-so-distant future.

The markets -- the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) -- continue to believe some kind of fiscal cliff deal, from le grand bargain to a half-baked pudding pie, will get done and the worst case scenario will be avoided before year end. There's a growing minority that thinks that the end of the year may be too soon and even a few (see "THE CLIFF" below) who say that a Thelma & Louise moment is in the offing.

To help us deal with all of the confidence, questions, conundrums, and catastrophe out there in the financial world, we turn to our favorite market sage, the Zen master, who once again wisely quips, "We'll see."

To which we reply, "That's what we're afraid of."

Click on the image below for a quick comment about each of the 25 worries facing investors right now, or scroll down for a text-only version of this column. (Also see, "What is Lloyd's Wall of Worry?" below.)



Lloyd's Wall of Worry (Text-only version)

QE:
Looking like a gear shift to "unsterilized" QE (no longer offsetting long-term bond buying with short-term bond selling) is on the horizon. "Keep it comin' love, keep it comin' love…"

US ECONOMY: ISM manufacturing survey reading drops below 50. Scapegoat du jour: Hurricane Sandy.

UNEMPLOYMENT: The historical economic technical term for the current situation: "Hot mess."

INVESTOR SENTIMENT: Talk to the back of the head, as the rest of the body is running away.

HOUSING CRISIS: Foreclosure numbers down means more less awful news. We'll take it!

EUROPEAN ECONOMY: May have put in a short-term bottom in November. Not necessarily a long-term bottom, but a bottom is a bottom, to which I say, "Bottoms up."

THE EUROPEAN UNION: "There's a hole in the bucket, dear Liza, dear Liza…"

SOVEREIGN DEBT: "It's all good," says Dylan at his sarcastic best.

SPAIN: After about a year and a half of thinking about it, they finally made a well-thought-out, detailed, official statement about their financial well being. Full translation of the document: "Help."

VOLATILITY: The surprise is that it is really starting to trend lower. I never thought I would miss hyper-volatility. And, I was right.

HIGH FREQUENCY TRADING:
Lloyd: Fiscal Cliff?
HAL: Classic Mayan Calendar 12/21/2012 stuff.
Lloyd: Believe it?
HAL: One can hope.

CHINA: PMI reading hits 50.6 in November, matching the year's previous highs -- kinda like clockwork.

STOCK MARKET TECHNICALS: Plenty of resistance overhead, plenty of support down below, plenty of confusion right where we are.

GLOBAL ECONOMY: Predictions that it will pick up in the second half. I just hope they are talking about 2013.

RETAIL SALES: Shaky start to the season brings out the 30-50% off sales signs early. And that's for stuff we actually want, too.

JAPAN: The best we could come up with is that the current slowdown may be a short one. Like going to the dentist and getting the good news that you only need one root canal rather than two.

THE CLIFF: My buddy and balance sheet pro "Cynical Steve" says the fastest route to the road to recovery is to drive right off the fiscal cliff. I gotta tell you, he's always been a good driver.

GREECE: With the yield on 10-year debt below 15%, now even the loan sharks can't get work.

DRAGHI: I got the whole eurozone in my hand, I got the whole, wide eurozone in my hand…

GOLD: Cries of "Foul!" and "Manipulation!" coming from the bug crowd again. Golly, Gomer, can you imagine that happening in the oldest non-edible currency market in world history?

GERMANY: Economic slowdown coming a bit too close to home. Suddenly eurozone debt restructurings don't look so bad.

VOLUME: On a relative basis, equity market trading is not so bad. Relative to the activity in the market for National Hockey League tickets, that is.

MIDDLE EAST: "Temperature's rising, temperature's rising…"

US CONGRESS: Having yet another sippy-cup-and-spaghetti-throwing-"Pay-attention-to me!" moment.

US PRESIDENT: "I cannot tell a lie…it's Congress' fault."



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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