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Teflon Markets Ready to Ignore Budget Debates (Again)


Lloyd's Wall of Worry drops a notch as the markets continue to grind higher. Still, North Korea has joined the list of concerns facing investors.

This week, for the first time since 2008, the US Senate will have a budget debate on the floor. Look forward to an uninspiring episode of American Grandstand as these elected fifty dance their way around doing anything substantive. With an average age of 60 plus, this austere group has yet to realize that the days of the Gridlock Twist are long behind us. So hope for the best, but expect unrest.

Not that the Teflon markets seem to give a hoot nor holler as the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), Nasdaq (INDEXNASDAQ:.IXIC), and even the Euro Stoxx 50 (NYSEARCA:FEZ) continue to grind higher. For those of you who ducked out early last Friday, Italy did get downgraded by the ratings agencies. It was the first time I have ever seen a global financial collective yawn. Quite a non-sight. Bull market much?

So the Wall loses one notch as we saunter into a light news week. Perhaps the politicians in the US take this opportunity to turn the world's attention to their combative musings -- why not? I can't imagine what the Washington, DC, crowd will step in this week and I gotta tell you, I'm not even going to try.

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

QE: The Ben Bunch at the Fed squashed any QE ending interpretations right quick.

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

UNEMPLOYMENT: Job opening! Pope: great benefits, lots of authority, extensive travel, snappy red shoes.

INVESTOR SENTIMENT: Greed lands a roundhouse kick to the glass jaw of fear and the markets go wild!

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.

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

CONSUMER SENTIMENT: Taking a lot of hits but still "able to leap tall buildings in a single bound!"

SOVEREIGN DEBT: Cyprus, care to explain yourself?

SPAIN: Missed their budget cut goal. Now there's a shocker.

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

Lloyd: You ready for a market correction?
HAL: All dressed up and no place to go.

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: Ladies and gentlemen, I give you the National Anthem of Italy. While they still have one.

GLOBAL ECONOMY: If the credit ratings agencies downgrade Italy but nobody reacts, does it make a difference? Ah, that would be yes.

SPENDING CUTS: Coming soon to a government agency near you!

JAPAN: To Abenomics and beyond!

GOVERNMENT SHUTDOWN: The aces in Washington, DC, have until the end of March to come up with a continuing resolution to avoid a shutdown. See you March 26 with an update.

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: We asked for it, we got it.

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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