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Spain on the Run, Italy Not Far Behind

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Spain must be saved or its dive to the bottom of the ocean will take much of Europe with it.

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MINYANVILLE ORIGINAL The European Union is on the boil once again and this time it doesn't look like a patch job will be enough. Greece is a well-known basket case, but not big enough to sink the ship. Now Spain is a different story. Spain must be saved or its dive to the bottom of the ocean will take much of Europe with it. The time for action draws near, like this week, as the credit markets are driving up the cost of capital for Spain to levels that could threaten solvency. The world is waiting and the world economy is slipping. EU, it's time to go strong or go home -- and let me tell you, home may not be too welcoming.

Not to be overlooked, we are in the fire hose week of earnings season and the health of the bottom-line is the bottom-line. So far the Dow (^DJI), S&P (SPY) and NASDAQ (^IXIC) have held up pretty well as the reports have been mezza-mezza, and the guidance going forward, more mezza. Businesses worldwide are tightening up spending as Europe re-spirals and China continues is opaque economic slowdown. What do we need? Some clarity, some control, some confidence. Not too much to ask from our leaders, even if August is just around the corner.

For more on each of the 30 worries facing investors this week, click on the graphic below or scroll down for a text-only version of this column.




Wall of Worry: Text-only

QE: Fed Ben still sitting on his remaining pile of chips, not going all in just yet as he perversely waits for a worse economic hand to play.

US ECONOMY: Heat wave continues to burn up America's mid-section. Can you spread zinc oxide on an entire country?

UNEMPLOYMENT: Jobless claims spike up again. Jobless hopes spike down again.

INVESTOR SENTIMENT: Somewhere in the North Atlantic atop the massive island glacier that just broke off of Greenland.

HOUSING CRISIS: Sales of existing homes take a sharp turn downwards as people realize that buying a house that someone else doesn't want with money they don't have may not be a good long-term financial proposition.

CENTRAL BANKS: Globally coordinated economic stimulus coming -- to be followed by globally coordinated economic confusion.

EUROPEAN ECONOMY: Going to get worse before it gets even worse than that. But, hey, take off August anyway.

THE EUROPEAN UNION: Time to accentuate the positive for a change. The southern countries have the most beautiful languages in the world...that are dying in usage and basically devoid of economic worth, but absolutely mellifluous and lovely in tone.

SOVEREIGN DEBT: Only one way this ends and that's with a "DNR" – Do Not Resuscitate/Default 'n' Restructure.

SPAIN: Stop the charade and drop the "S" already.

10-YEAR TREASURY YIELDS: What's all the fretting about? The 10-year is telling us that inflation will be only 1.50% ten years from now...and that we should all keep our voluntary suspension of disbelief on full blast until further notice.

SYRIA: Officially horrific and setting up as a civil war/proxy war country unless something gets done quickly.

VOLATILITY: The VIX (^VIX) is dead, the VIX is dead. Long live the VIX!

HIGH FREQUENCY TRADING:
Lloyd: Who do you think will win the presidential election in November?
HAL: Depends.
Lloyd: Depends on what?
HAL: On how many votes I'm able to register while the polls are open.

CHINA: Numbers keep coming out and they're not too hot and...not too hot.

STOCK MARKET TECHNICALS: They're working again. Why? Because nothing else is.

LIBOR: Heads rolling, dollars flowing, and politicians glowing.

GLOBAL ECONOMY: World grain prices surging, world economic crisis hot on its tail.

INDIA: Pulling back on its gold purchases, which is unlike India and counter-trend culturally. On the other hand, spending its money on food and shelter is with-trend and culturally sane.

TOO BIG TO FAIL BANKS (TBTF): "They say that breaking up is hard to do. Now I know that it's true…"

US PRESIDENTIAL ELECTION: I wonder if the members of Congress will chose not to vote on this like all the other stuff they pass on?

CREDIT MARKETS: It ain't saying much, but through all the muck, mire, and manipulation, they still point to financial true north as often as possible.

THE CLIFF: Our kingdom for an agreement on this. And it just may come to losing the kingdom at that.

GREECE: Just sell Santorini to China and we'll call it even.

CORN: Price of the golden soybean is up about 40% in the last month. No inflation here, folks, just keep moving along...

THE EURO CURRENCY: Slowly depreciating, like it's walking down a staircase. Let's hope it doesn't miss a step.

ECB: Front and center once again. Go strong or go home, and let me tell you, home may not be so welcoming.

EARNINGS SEASON: Goodbye, trickle of reports; hello, fire hose.

SOUTH KOREA: Proximity to China used to be a bonanza, but with Big Red slowing, it's more like sitting next to the sick guy on the airplane.

ITALY: Sicily looking vulnerable. If the food wasn't so good, Italy's boot would kick it over to Greece.


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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