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Et Tu, Cyprus? Investors Still Fear Ripple Effects of the Mini-Crisis

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Cyprus might be a mini-crisis, but it brought back risk on/risk off nervous ticks. "Lloyd's Wall of Worry" rises one block.

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Yeah, we were aware of it, and, yeah, it was on the Wall for the last week or so, but we didn't think it was a major buzzkill.

For $17 billion we're gonna close down the 2013 Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), Nasdaq (INDEXNASDAQ:.IXIC), and all global ex-China Bull Market? Jeez, someone write 'em a check, slip the ECB an IOU, get 'em one of those limitless invisible credit cards for goodness sakes; it's not even springtime yet. Problems like this are supposed to be scheduled for the fall season. Man, it's getting so we can't even do a crisis properly anymore.

Okay, it's likely a mini-crisis, but after a few months of relative stasis this quickly brings back risk on/risk off nervous ticks. But don't go back to gaining weight and losing sleep just yet. Cyprus' plan of raiding piggy banks has been shelved, and we could see a Troika plan sooner than later. We can certainly hope.

Just as we were ready to see the Wall drop another notch or two, the eurozone reminds us that it remains the biggest economic basket case in the world -- no small feat. The financial market ripple effect is now moving across the pond, over the river and through the woods westward until settling on the unsettled shores of the Far East. Oh well, now we wait for a positive ripple to start….

We're waiting….

Scroll down to read the text-only version of this story, or click on the image below for an interactive verison of this column.



QE: Low inflation, low interest rates, low employment. Wash, rinse, repeat….

US ECONOMY: We are just one not-so-grand bargain from liftoff. Is that too much to ask for?

CYPRUS: Just kidding on the bank tax confiscation thingy. Instead, if you are one of the roughly 1 million people living here, how about just turning over the title for all your property…everywhere on Earth.

EUROPEAN ECONOMY: Uh, France? Could you at least show some effort?

UNEMPLOYMENT: The EU-27 rate (eurozone) at 10.8% and still ticking higher every month, even as it starts ticking lower most everywhere else.

INVESTOR SENTIMENT: Dip-buying is back. Go dips!

HOUSING CRISIS: Looking to knock this worry off the Wall once and for all with a solid spring selling season. Not counting on one, but certainly looking for it.

CONSUMER SENTIMENT: As of the last reading, "La da-da-da da da da feelin' groovy…"

SOVEREIGN DEBT: "Don't you forget about me…"

SPAIN:
Cyprus? We don't need no stinking Cyprus.

VOLATILITY: Showing a striking inverse correlation to trading volumes. Is this working for anyone?

HIGH FREQUENCY TRADING:
Lloyd: Worried about the renewed concerns in Europe?
HAL: Yup. Concerned they'll fad away too quickly.

CHINA: Economic numbers coming out of the Lunar New Year are a bit tepid. Except of course for the estimate-busting +3.2% inflation number.

ITALIAN ELECTIONS:
Was this settled? Or has the art of kicking a political can down the road made its way to Europe?

GLOBAL ECONOMY: Puerto Rico, an American protectorate, gets downgraded by a ratings agency. A little too close for comfort maybe?

US SPENDING CUTS: I hear they have been planning on this for a while…and how to avoid doing them.

JAPAN:
To Abenomics and beyond!

GOVERNMENT SHUTDOWN: Still need a vote on this from the busy folks in Washington, DC.

DRAGHI: "Everybody's talking at me, I don't hear a word they're saying…"

NORTH KOREA: Lighting off underground nuclear tiger crackers again. Will someone please take away their matches?

SEQUESTRATION:
Corporate mantra of the week, "It's a lot of money that will be cut but it won't impact us."

US CONGRESS: Compromise? We like it. You compromise and we'll like it.

US PRESIDENT: Compromise? I like it. You compromise and I'll like it.


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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Positions in SPY, IWM, DIA, XLF, GLD, IWO, IWN
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