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The Central Banks Speak, The Markets Will Be Listening


Announcements from the Bank of Japan, the US Fed, and the ECB are all coming up this week.

Will this be the week the markets stood still…and listened? Welcome to Central Bank Week where the Dow (INDEXDJX:.DJI), the S&P (INDEXSP:.INX), and the Nasdaq (INDEXNASDAQ:.IXIC) may have a bit more trouble grinding higher than they've had in the last couple of weeks.

Bank of Japan's Governor Haruhiko Kuroda will kick things off on Wednesday with a decision and press conference where no change and lots of market-soothing comments should be made. He will re-emerge to give a speech at a dinner on Thursday, but nothing new is expected unless Wednesday doesn't go well.

Wednesday also brings us US Fed Chair Ben Bernanke testifying before Congress; might I suggest pictures and graphs this time? Later that day we get the minutes from the last US Fed meeting, which will be analyzed, interpreted, misinterpreted, and fretted about until the next time we get meeting minutes.

Not to be left out of the line-up, the ECB's Mario Draghi speaks in London on Thursday. About what we do not know; it may just be a last-licks position that puts him in the spot to lead the central bank news of the week going into the weekend.

Last but probably not least, the US durable goods number will hit the tape before the open on Friday, and it might turn out to be the real news of the week mostly because no one is talking about it yet.

And how about this for cocktail party stock market conversation if it ever happens again: Greece's ASX stock market is up about 27% this year, second only to Japan's 45+% gain. Cheers/ΥΓΕΙΑ!

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: Fed Chief Ben testifies to Congress on the 22nd (if they're not too busy to listen, that is). And then the FOMC minutes hit after the close. Am I the only one besides a few Algos that reads these things?

US ECONOMY: Some days, it's good; some days, it's bad; some days -- actually, most days, we just don't have a clue.

UNEMPLOYMENT: Job insecurity survey sentiment hits a 20-year high in the UK. This means only one thing: Time to get rid of that bloody survey.

INVESTOR SENTIMENT: Arguing that 120-million-to-1 odds are finite, mom and pop investors still have more faith in winning the lottery than winning in the stock market.

HOUSING CRISIS: All my friends are selling their homes within weeks of listing them, leading me to ask, "Is the mother of all housing crashes finally over?"

EUROPEAN ECONOMY: GDP numbers just came out, and the good news is that they were only a tad worse than expected. Everybody gets a trophy!

FRANCE: Seriously considering a tax on smartphones, aka, "The Dumbtax on Smartphones."

US EXECUTIVE BRANCH: Lots of Hyphen-Gate smoke though no grease fire detected so far.

SPAIN: The government has mandated the country's banks to sell 10-year bonds. Makes you kinda wonder what their crystal ball says about life in 2023?

VOLATILITY: Forget gold and equities: The new king of the volatility hill is Japanese bonds, aka, JGBs (aka, "Just Gone Bonkers").

Lloyd: You remember Mother's Day this year?
HAL: Yep, got her flowers.
Lloyd: Did you give them to her, then take them back, then give them to her, then take them back --
HAL: Last time I heard that one, I was running DOS software, executing portfolio insurance.

CHINA: Good news just in: They haven't popped their housing bubble yet. Whew!

GLOBAL ECONOMY: Okay, we can handle a low-to-no growth environment…just as long as it stays in Europe.

JAPAN: Regarding the yen currency, to quote Patton Oswalt, "My weakness is strong."

DRAGHI: Speaking in London on the 23rd around tea time, so expect more of the usual crumpets and jam.

SEQUESTRATION: So far, the biggest impact seems to be on slightly weakening real estate values in the Washington, DC, area. Not gonna be a lot of tear shedding outside the beltway on this one.

PORTUGAL: Still concerned that they may contract the "Cyprus Virus." Symptoms include losing all your money, all of your economic community buddies, and ultimately, your sovereign sanity.

SYRIA: Formal condemnation and roadmap to government transition may be forthcoming…and may not be.

GOLD: The money guys are selling; the central banks are buying. The pressing question in today's world of financial melee being, can they both be wrong?

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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