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All Stock Market Roads Lead to the Debt Ceiling


QE watch takes a backseat to the need for a continuing resolution and the debt ceiling vigil.

Move aside, QE watch; for the time being, the debt ceiling vigil is center stage. The elected officials in Washington, DC, have once again found a way to rivet our attention on one thing: them.

Not to be ignored is the need for a CR (continuing resolution -- so that the government can continue to operate until the official appropriations are made by Congress) and an effort to avoid a government shutdown. Right now, both look likely to be resolved during the next few weeks, perhaps only to clear the decks for the aforementioned debt ceiling showdown. Rah-rah-ugh.

So the Dow (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), Nasdaq (INDEXNASDAQ:.IXIC), NIKKEI (INDEXNIKKEI:NI225), DAX (INDEXDB:DAX), and any other index you focus on will likely trade off the ebbs and flows of the debt ceiling news that will fill our screens for the next month. Of course, when that's over, we can kick back and relax and go back to QE watch.

No one ever said it was going to be easy.

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: "More, more, more. How do you like it? How do you like it?"

UNEMPLOYMENT: Hard to celebrate the drop while thousands are still losing their jobs in Financeland.

US ECONOMY: "Wishin' and hopin' and thinkin' and prayin', plannin' and dreamin'" that it continues to stay in the +2% range.

INVESTOR SENTIMENT: Still very cautious based on the seven remaining "investors" I polled here on Planet Earth.

HOUSING CRISIS: Renting is becoming the new owning. Owning is becoming the new landlording.

EUROPEAN ECONOMY: "I'm coming out, I want the world to know, got to let it show..."

VOLATILITY: People questioning if the VIX (INDEXCBOE:VIX) indicator still works. I can tell you that my stomach indicator still works.

Lloyd: What do you think the market impact from Fed tapering will be?
HAL: Anything short of mayhem will be a disappointment.
Lloyd: That's it. You're officially off my holiday gift list.
HAL: What's a holiday?

CHINA: Considering opening up their markets to REITs, margin trading, and shorting selling. Coming close to officially declaring, "The water's fine, boys, come on in!"

GLOBAL ECONOMY: We may be only twenty feet off the ground at Kitty Hawk, but it beats being on the ground.

CONTINUING RESOLUTION: The US needs yet another stopgap measure so that it can pay its bills. Note: This is different from the debt ceiling issue, which allows it to continue to pretend that it will pay its tab in full one day.

BONDS: As we go to print, the 10-year yield is dropping steadily and all is calm. Best advice: Take a picture.

CENTRAL BANKS: India's RBI (Reserve Bank of India) raises interest rates to fight off inflation and to stabilize the country's currency... and to confuse everyone that much more.

MORTGAGES: Tough to get one in China these days. Not sure what that means, but I am sure that it concerns me a bit.

FRANCE: President Hollande rethinking that 75% tax rate for upper income earners. Better hurry up as there likely aren't many left that still live in France.

CONSUMER CONFIDENCE: Only thing the US consumer is confident of is that Washington, DC, politicking will continue to erode our confidence.

SPAIN: Has put in a reservation for a large table at the LTRO (long-term refinancing operation) bistro in case head chef Mario Draghi decides to open it up again.

OIL PRICES: Syria comes off the table, oil comes off the Wall.

RETAIL SPENDING: In search of a new American pastime, as clearly malling has lost its charm.

DEBT CEILING: Red lines being drawn by the executive and legislative branches of the US government. Once we get the Supreme Court to chime in, we will have a trifecta.

SYRIA: Still a nasty, unpredictable civil war going on here, folks.

EMERGING MARKETS: Leaders from the EMs seem more concerned about Fed tapering than leaders in developed markets. And they should be.

GOVERNMENT SHUTDOWN: Is it even open now?

FED CHAIR: "Any day now, I will hear you say..." who the new Fed chair is, Mr. President.

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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LK/KCLP Ownership Disclosure: SPY, QQQ, GLD, TBF.
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