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Will It Be the Macro Market Week From Heaven or From....


The macro monster will be out and about this week and may inflict some damage if expectations that were already lowered are not easily met.

Central bank decisions, jobs numbers, and PMI readings -- truly the stuff that macro mayhem is made of. After a week that saw the Dow (INDEXDJX:.DJI), the S&P 500 (INDEXSP:.INX), the Nasdaq (INDEXNASDAQ:.IXIC), basically all the foreign markets, and Apple's (NASDAQ: AAPL) stock rise (take that, Sir Isaac Newton!), let's break down the three-headed macro monster heading our way posthaste.

Starting on the almighty interest rate front, the action is likely to go like this: The ECB cuts and the Fed doesn't. Every action has an equal and opposite reaction, right? Well, probably not this time as both are likely to be greeted with a "just hang up your coat in the closet, we're sitting in the den watching the NFL draft replay."

Next on the agenda are the US employment numbers. We get a tease estimate on May 2 and then the real deal on May 3, with the actual, until revised, number. Looks like we are a long way from the 200,000-added-jobs Mendoza Line, so lowered expectations abound. "Expect the worst, hope for the best" – what a depressingly useful expression that is.

Last and likely least is the monster's PMI head. We got the Flash PMI numbers last week and they were not so flashy, therefore the financial markets aren't expecting much here (see quote above).

So the macro monster will be out and about this week and may inflict some damage if results fall short of pre-reduced expectations. Kind of like getting a steak at 50% off and then getting that "something doesn't taste quite right" sensation while you're chewing.

Enjoy your meal. Y'all come back now, ya hear!

Click on the image below for an interactive version of the Lloyd's Wall of Worry, or keep reading below.

QE: "It's a long way to Tipperary, it's a long way to go…" and when you get there QE will likely still be going strong.

US ECONOMY: Stuck in second gear. Kind of like setting the cruise control at 35.

UNEMPLOYMENT: If we see a move back up to an 8 rate again in the US, we got problems -- or should I say, more problems....

INVESTOR SENTIMENT: The stock market with its multi-minute flash crashes still looking more like snake oil than real oil to Mom and Pop out there.

HOUSING CRISIS: Sell, sell, sell is seeing some buy, buy, buy. Good, good, good!

EUROPEAN ECONOMY: The first rule is that you have to at least try. "You gotta get up and try, try, try…"

FRANCE: Lowering capital gains tax rates is under consideration. Now you're speaking our language…because goodness knows none of us speak yours.

DEFLATION: Fears of it spreading from commodities to just about everything else.

SPAIN: The unemployment rate tops 27%. I get upset just writing that, I can't imagine living through it.

VOLATILITY: "I'm back! Back in the New York Groove."

Lloyd: What do you think of the market action?
HAL: When you can only get off a few days of a Gold Flash Crash and barely a few minutes of a Dow Jones Industrial Average Flash Crash, clearly nothing is sacred anymore.

CHINA: This sudden bout of monetary and fiscal responsibility is really messing up the global asset inflation plan. Get on the same page with us, man!

ITALIAN ELECTIONS: New government has been sworn in. Now the real swearing will begin!

GLOBAL ECONOMY: Spring, a season for renewal and hope, and that time when the world economy swoons once again.

SPENDING CUTS: Bowles-Simpson II or Simpson-Bowles II... "Any way the wind blows, doesn't really matter, to me…"

JAPAN: If they get their economy to grow one-tenth as fast as their stock market has in the last few months, all will be well in the garden.

EARNINGS SEASON: Excluding One-Time Charges, Stock Option Expense, Investment Spending, Impact of Weather and Currency, it still seems kinda soft.

DRAGHI: Interest rate cut expected, as is its complete lack of impact.

NORTH KOREA: Time for the State Department to make a list of retired near-great athletes willing to visit for a fee and a photo op.

SEQUESTRATION: First impact, flight delays in NYC. My experience tells me that they made that one retroactive for the last 10 years.

CYPRUS: Still feeling sick, but so far, not contagious.

COMMODITIES: Dr. Copper and friends have left the building.

PORTUGAL: Just waiting and waiting and waiting for a Sunday night to almost financially implode.

SYRIA: Chemical weapons rumor. Let's hope this one was lost in translation.

GOLD: Central bank buying at levels not seen in years. A red flag for all the contra-indicatoristas out there.

TERRORISM: Nothing really to say about this. It just is.

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.

Also see:
Gold Mavens Study Hindu Culture Along With QE3

The Big Picture Charts Look Positive

Where Is the Larger Bubble, in Stocks or Bonds?
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Position in SPY, DIA, GLD, AAPL
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