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Central Bank Thursday: This Week, It Is Bernanke's Turn


It's likely that the markets will drift up and down until we hear what pitch we're getting, unless, of course, Europe takes a massive detour in the meantime. Investors, stay alert.

MINYANVILLE ORIGINAL We're gonna get something from Fed Chair Bernanke; we just don't know exactly what it's going to be. To use some sports metaphors (a real novel thing to do in finance land, I know), we're wondering if Fed Ben will give us more of the straight heat (Treasury buying), the slider (mortgage buying), or the curve (something we haven't seen yet and may be hard to hit).

It is likely that the markets -- the Dow Jones Industrial Average (^DJI), the S&P 500 (^GSPC), Nasdaq (^IXIC), and DAX (^GDAXI) -- drift up and down until we hear what pitch we're getting... unless, of course, Europe takes a detour via a wayward election in the Netherlands or Germany rejecting the latest proposed actions by the ECB using the ESM (European Stability Mechanism). There will also be plenty of economic numbers from around the world to offer some light reading while we wait for the biggie on Thursday.

While gold has seemingly entered a happy realm of its own, there's never a dull moment in the rest of marketville, so get your scorecard out to track the decisions and the numbers -- but make sure to take some batting practice swings pre-Central Bank Thursday as we really may get the deuce (the curve, to those of you that are baseball impaired) and how the markets connect with it is anybody's guess.

"Take me out to the Fed Game, take me out to the fun...."

Click on the graphic below for a comment about each of the worries facing investors this week, or scroll down for a text-only version of this column and an explanation of how it can be used as an investing tool.

Lloyd's Wall of Worry -- Text Only

QE: Ace Hurler Ben Bernanke enters the game on Thursday. Question is, will he throw us a heater over the plate (buy more Treasuries), the slider (buy mortgage-backed securities), or the deuce ("the curve")? It's anyone's guess.

US ECONOMY: +1.9% GDP growth. Now that's American exceptionalism, dog!

UNEMPLOYMENT: Youth is not wasted on the young in euro land. The overall euro area unemployment rate is 11+%, with youth unemployment at 20+%.

INVESTOR SENTIMENT: "Death of Equities! Death of Equities!" And if they go up another 10%, they will be even more dead! Is it me or does this look like a classic Elmer Fudd "Shoot Him Now" moment?

DUTCH ELECTIONS: Hey, they count! The could tip the scales in favor of more or less austerity in euro land.

DRAGHI: "How you like me now? How you like me now?! How you like me noooow?!!..."

ITALY: Ah, that feels better. Molto bene!

GERMANY: Ruling on the ESM this week. To proceed or not to proceed, that is the question. The answer better be proceed.

HOUSING CRISIS: "Could this be the magic at last, could it be magic!..."

CENTRAL BANKS: They come in once a week, hit the "print" button, and then take the rest of the week off. Works for the markets.

EUROPEAN ECONOMY: France 'fesses up that their economy is indeed contracting. I nearly dropped my tray of petit fours when I heard the news.

THE EUROPEAN UNION: Looking like they will hang together until the German elections next year. After that, it's every country for itself.

SOVEREIGN DEBT: Lots of ECB buying. What I want to know is who's selling.

SPAIN: Waiting to see if they asks for help from the ECB. They probably will, but they will not, under any circumstance, say, "Pretty please."

VOLATILITY: Missing In Action. And isn't that nice.

Lloyd: September already. Year's flying by.
HAL: I know. Where do the nanoseconds go?

CHINA: "Danger, Will Robinson, danger!..."

STOCK MARKET TECHNICALS: Some technicians say down, but the market body says up, up, up...


CONSUMER CONFIDENCE: Hard to get a good read on it with everyone hiding under their couches.

US PRESIDENTIAL ELECTION: Party's over. Fight starting.

CREDIT MARKETS: Implosion averted. Stay tuned to your local listings for the next end-of-the-world moment.

THE CLIFF: Back to talk of delays and extension here, a.k.a., Congress' true comfort zone.

GREECE: Still on holiday. Swing by around New Year's.

Monsoons in India, hurricanes in the US -- just what the food doctor ordered. Thanks, Dr. Harvest.

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.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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