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All Fiscal Cliff, All the Time: Investors Losing Confidence, Fear Recession


Until something is signed, there's only one worry dominating market fears.

MINYANVILLE ORIGINAL European economy sliding; forget it and tell me about the fiscal cliff. Japan's got a current account deficit for the first time in 30 years; forget it and tell me about the fiscal cliff. Unemployment over 25% in Greece; right, now gimme the skinny on the fiscal cliff! This is going to be the heaviest leitmotif in market history until we get something signed that keeps the US from willingly jumping off a steep fiscal cliff and into economic recession...or worse.

The markets signaled their underwhelming confidence in the US government's ability to get a deal done to solve this soon-to-be self-inflicted economic knee-capping by selling off the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) by over 3% in two post-election days. At the moment, we seem to have stabilized (read: stopped going down) as we ingest gas-filled trial balloons from the left and the right aisles of US political theater. A deal will have to get done somewhere in the middle. While this is the likely outcome, the middle is still a very quiet, lonely, uninhabited place in the American political landscape.

I wonder if the American founding fathers knew what they were getting us all into when they started this thing. Or better yet, Christopher Columbus.

QE: Expecting QE 4-10 if we go over the fiscal cliff. And it won't be enough.

US ECONOMY: About positive 2% now. Likely becomes a negative 2% if we fall off the fiscal cliff and a positive 3-4% if we don't. Easy choice, no?

UNEMPLOYMENT: New Zealand's unemployment rate hits a 13-year high of 7.3%. Not even the Kiwis are immune.

INVESTOR SENTIMENT: Fiscal cliff watching before making any moves. The fiscal cliff leitmotif continues...

HOUSING CRISIS: The White House was just appraised at a cool $284.9 million. A golden sale-leaseback opportunity if there ever was one.

EUROPEAN ECONOMY: Their economic cliff makes our fiscal cliff look like a jump into the kiddie pool.

THE EUROPEAN UNION: "Don't worry, be happy..."

SOVEREIGN DEBT: Starting to really signal "all clear," thereby making me that much more nervous.

SPAIN: EU reports back to Spain on its proposed budget plan this week. Hopefully it comes with a check paper-clipped to it.

VOLATILITY: Back from a mid-year hibernation to celebrate the holiday season with us all.

Lloyd: Any thoughts on the renewed market volatility?
Lloyd: Wonderful.

CHINA: Closing in on the date for their once-in-a-decade government transition. No pressure. But if they mess it up, I'm first in line at the canned soup aisle in the supermarket.

STOCK MARKET TECHNICALS: Will the 150-day moving average brings promise or precipice?

GLOBAL ECONOMY: Glass half-empty, glass half-full. As we used to say in my college dorm, "Half a drink is better than no drink at all."

RETAIL SALES: Here come the holidays as Black Friday morphs into Green Thursday. Soon retailers will offer a complete in-store sit-down Thanksgiving turkey dinner with every purchase.

JAPAN: Records its first current account deficit (when a country is importing more than it is exporting) since 1981. Welcome aboard the "USS Spend More Than You Got" ocean liner.

THE CLIFF: We all lose if this is not dealt with post-haste. Shining up my bugle and practicing "Taps" just in case.

GREECE: Running low on cash. Maybe they'd like to become the 51st American state? Certainly would fit right in.

DRAGHI: We watch, we wait, we wonder.

ITALY: Yield on their 10-year sovereign debt drops below 5%. Good news, but not quite investment grade yet.

SYRIA: The proxy war du jour.

GOLD: The rumor of the week is that some European countries may use their gold holdings as collateral against their debt to lower their borrowing costs, thereby taking a page out of the first known fiscal handbook, written around 5,000 BC on a block of granite with a chisel.

GERMANY: The last engine of EU growth rapidly becoming another anchor. SOS.

VOLUME: Forget the "flowers." "Where has all the volume gone…"

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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