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Investors Worry as Interest Rates Go Up in Brazil, Technicals Look Bleak, and Earnings Season Begins

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Then there's the projection that growth will be back-end loaded this year. Does that mean it will actually be front-end loaded into next year?

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The whole central bank world is loosening or staying loose, and what does the biggest party animal of us all do? Turns on the lights and tells us all to go home.

Brazil will likely raise its key interest rate 50 basis points (that's one-half of one percent to the non-digit-head masses). So far, between that and the slowdown in China growth, the Brazilian stock market is taking it on the cosmetically sculptured chin. The party ending in Rio? We do live in interesting times.

Meanwhile, back in the developed markets, the Dow (INDEXDJX:.DJI), S&P (INDEXSP:.INX), and Nikkei (INDEXNIKKEI:NI225) are reignited and reunited and it feels so good, as they attempt to claw their way back to recent highs. The technical crowd is sounding muffled alarms, warning that a failed move above the recent highs or a breakthrough without a hold could lead to a real correction this year. Not what you want to hear as we backstroke toward August, but it's just one group's opinion, so take it with a grain of sea salt.

Last and certainly not least, earnings season is upon us. It's that magically crazed period after pre-announcement season and before mid-quarter updates that gives us a snapshot of the past -- and most importantly, a pencil sketch of the future. Let's hope the sketch looks more like a Da Vinci than a Da Lloydi because I can't even write my name legibly, let alone draw a horse.

Click on the image below for an interactive version of this week's Wall of Worry, or scroll down for the text-only version and an explanation of how the Wall works.





QE: Barring something really bad, the beginning of the end starts just before September 21 -- or EWF Day to all you 1970s kids. "Do you remember, the twenty-first night of September…"

UNEMPLOYMENT: Not ready to give up the worrying ghost just yet as the underemployment rate ticks up to 14.3%.

US ECONOMY: 2013 GDP growth now projected to be "back-end loaded." The use of the most dangerous phrase in the earnings world -- "back-end loaded" -- puts us on edge as it often morphs into "front-end loaded" for the following year.

INVESTOR SENTIMENT: See you in September.

HOUSING CRISIS: Will the rising mortgage rates be the Grinch that stole the housing recovery?

EUROPEAN ECONOMY: Bottoming... constantly.

VOLATILITY: Emerging markets reemerging as the volatility champs after a long hiatus in the land of tranquility, which is now a distant shore in the rearview mirror.

HIGH-FREQUENCY TRADING:
Lloyd: You are the most destabilizing thing I have ever seen hit the markets.
HAL: (blushing) Oh, I bet you say that to all the algos.

CHINA: We can deal with the carrot-and-stick disciplining, but for goodness sake, don't use liquidity!

GLOBAL ECONOMY: Economists' growth estimates downgrade season has begun. "How low can you go..."

JAPAN: The yen is down; the business confidence is up. Happy six-month birthday, Abenomics.

DRAGHI: The plan is to leave interest rates at low levels for an "extended period of time" -- or until he leaves his ECB post, whichever comes first.

SEQUESTRATION: Let's hope this successful failure does not prompt another such piece of legislation to deal with the debt ceiling.

BONDS: Warning: The Surgeon General has determined that opening your June 2013 Bond Portfolio Statement could be hazardous to your health.

SYRIA: "Ignore me at your own risk."

CENTRAL BANKS:
The Bank of Japan, ECB, and Bank of England are leaning forward while the FOMC and China are leaning back. The experiment continues...

THE NIKKEI: Bull market -- game back on!

SHIBOR:
Yeah, it's settled down under 3.50% again. And yeah, if you ever stop keeping an eye on this rate, you're crazy.

BRAZIL: About to start an interest rate increase cycle this Wednesday. Foreign exchange problems, weakening economy, and all the other problems we all have, and yes, you read the first sentence correctly.

ETFs: Investors taking a closer look to make sure the product resembles the pretty picture on the box.

DEBT MARKETS:
Confused but still open.

COMMODITIES: Time to make an appointment for a check-up with Dr. Copper to see if the commodity sell-off is economically systemic or just a short-term bout of market indigestion.

EGYPT: As far as the market is concerned, "as long as the routes (through the Suez Canal) are not severed, all is well."

PORTUGAL:
Calls for a snap election by the president. Likely to be followed by a call for a snap economy, a snap debt restructuring, and a final snap, crackle, and pop, unless all goes smoothly.

EARNINGS SEASON: The reports will be important; the outlooks, priceless.


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.
LK/KCLP Ownership Disclosure: SPY, DIA, GLD
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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