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Earnings Season Half Over, More Tenderizing to Come?


Looking ahead, investors are watching for PMI reports from around the globe, the next monthly unemployment number in the US, and word from Japan about monetary easing.

MINYANVILLE ORIGINAL Like a sous chef pounding a piece of veal, this earnings season is tenderizing stocks on a daily basis. And the good news and the bad news are the same: We're only half done. What we're finished with is the US presidential election debates. We're left with a race tighter than ever and a stock market -- with the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX) and Nasdaq (INDEXNASDAQ:.IXIC) -- more confused than before. More clarity comes on the morning of November 7…unless there's a tie. And to quote Forrest Gump, "That's all I have to say about that."

News flow this week will give us updates on various global PMIs, an FOMC statement, and something out of the ECB on the OMT (Outright Monetary Transaction) plan. Potential big news would be a PMI bouquet of roses from China or an action-taking Mario Draghi PDQ (Pretty Darn Quick).

Looking ahead, the rumor mill is spinning out the possibility of monetary easing from Japan next week and the mother of all unemployment reports in the US on November 2, a scant four days before the election. You do the math.

Click on the image below for specific comments about each of the 24 worries facing investors this week, or scroll down for a text-only version of this column and some tips about how to use "Lloyd's Wall of Worry" as an investing tool.

Lloyd's Wall of Worry (Text-only)

QE: Bernanke fending off the disbelievers, the disbelievers fending off Bernanke, the rest of us fending for ourselves.

US ECONOMY: Still managing to leap the many hurdles put in its way. A gravelly face-plant awaits us if we clip one of them, though.

UNEMPLOYMENT: Initial jobless claims move higher as unemployment rate moves lower. Conclusion: Confusing government numbers stay consistently high.

INVESTOR SENTIMENT: Astronomers have now found 33 Earth-like planets within 950 light years of Earth. Unsurprisingly, they all hate the equity markets there, too.

HOUSING CRISIS: Closing in on 900,000 housing starts in the US with the magic 1,000,000 number in sight. Sure would like to take this perennial worry off the Wall.

EUROPEAN ECONOMY: And now to do an interpretive skydive called "Euroland Economy in Motion", Mr. Felix Baumgartner…

THE EUROPEAN UNION: EU summit meeting later this week. No agenda will likely be released until menu items and wines have been selected. Food allergies, anyone?

SOVEREIGN DEBT: Greece debt dropping like a rock as it approaches 16%. This rock may just turn out to be a diamond.

SPAIN: Will call the ECB in November if they feel like it.

VOLATILITY: If Vol could speak: "Every time you try to get rid of me, I pull me back in!"

Lloyd: How's that new speech recognition software working?
HAL: A peach will improve my cognition where forking?
Lloyd: I told you a good product would be hard to find.
HAL: Gold production good in your backyard mine!

CHINA: Sure could use a "fat finger" moment here hitting the stimulus button.

STOCK MARKET TECHNICALS: Feeling heavy. And not just regular heavy, I mean like 10-minutes-after-your-second-piece-of-pumpkin-pie-at-Thanksgiving-dinner heavy.

GLOBAL ECONOMY: "Smile though your heart is breaking…"

US PRESIDENTIAL ELECTION: This just in from the Mayor of Murphy's Lawville: "What if it's a tie?"

THE MIDDLE EAST: Why do the markets care? Because right now, no one seems to care.

THE CLIFF: Rockets to the top of the "10 Most Dangerous Cliff Jumps on Earth" list.

GREECE: Debt levels cause fright , companies take flight. The wave of corporations fleeing has begun….

DRAGHI: "Action, action, we want action, A-C-T, I-O-N…."

ITALY: Monti seeing improvements in their economy within a few months. Still awaiting the official definition of "few."

EARNINGS SEASON: "Saving nickels saving dimes, working 'til the sun don't shine, looking forward to happier times…"

GOLD: Rumors starting that some deeply indebted countries -- take your pick -- may use their yellow metal stashes to reduce debt burdens. Shhh--- don't tell them it's not a currency.

OIL PRICES: Iran threatening to wreck a tanker in the Straits of Hormuz to ruin the oil supply. Sometimes there just isn't a pacifier big enough.

PMI: Flash PMIs from all over the globe are coming this week, giving us a snapshot of economic growth or lack thereof.

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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