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Time to Make a Move, Europe

By

The Wall of Worry is soaring as investors wait for Europe to be saved and watch the economies of China, India, and the US decelerate.

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Here we are again approaching yet another financial event horizon. With Europe as the epicenter this time, it kinda feels like those first three months in 2009, and it's a kinda bad feeling -- just ask the Dow (^DJI), the S&P (SPY), gold (GLD), oil (USO) and pretty much every market index and commodity on the planet. It's time once again to save the European Union, and time is running out. But let's say the ECB spreads a few trillion around to keep things together? Then all we need to sweat is decelerating economies in China, India and the US, and a global financial system that just ain't feeling any love from investors. Hey world, it's time to make a move. Check that, lots of moves. And fast.

This week's Wall of Worry stands at an uncomfortably high 28 blocks. Scroll down for a text-only version of this column and an explanation of how it works.



Lloyd's Wall of Worry -- Text Only

QE: Not yet back on the Fed's table, but certainly back on the menu.

US ECONOMY: Dreams of 4% GDP in 2012 dashed. Replaced with prayers for 2%+.

UNEMPLOYMENT: Twenty-four percent unemployment rate in Spain. And that's before their recession is official.

INVESTOR SENTIMENT: Financial market's approval rating right up there with Congress and those pirates off the coast of Somalia.

HOUSING CRISIS: House? House!? Who wants a house? I want a bunker.

CENTRAL BANKS: Looking like it's going to be a choice between printing money or untying the European Gordian knot. Start the presses!

EUROPEAN ECONOMY: Can austerity lead to prosperity? Maybe in the long run, but in the short run it definitely leads to sitting governments getting unseated.

THE EUROPEAN UNION: They need a major Hail Mary pass. And considering that they don't play American football in euroland, they may want to bring Brett Favre out of retirement…again.

SOVEREIGN DEBT: A fire hose of misery on full blast.

SPAIN: Currently in the eye of the storm; a storm that is roughly 3 million miles/10 million kilometers in size. That's 2% of the Earth's surface for all you globleophiles out there.

10-YEAR TREASURY YIELDS: As far as the investing public goes, "I can't, I can't, I can't get enough of your love…."

FINANCIAL INSTITUTIONS: "Yes, it's over, call it a day, sorry that it had to end this way...."

VOLATILITY: Does it count as volatility if stocks only go down? Mr. Market says yes.

HIGH FREQUENCY TRADING:
Lloyd: I read that high frequency trading is like 86% of daily volume in the US.
HAL: Yep, only 14% away from perfection.
Lloyd: What does that mean for all the humans in the market?
HAL: More leisure time.

CHINA: Growth becoming sluggish. Still the economic envy of the world, which says more about the rest of the world than it does about China. Sigh.

STOCK MARKET TECHNICALS: The US market's gentle, shallow retreat now edging toward being a bumpy, full-blown correction.

GERMANY: Graciously offering a little bit more inflation tolerance than they normally would. Now how about offering a trillion or two more euros to the eurozone more than they normally would?

OIL PRICES: Saudi Arabia says Brent should be $100/barrel. "So it is said, so it shall be done."

INDIA: Inflation up, GDP down. Fortune-telling the future for the rest of us? Gulp.

EARNINGS SEASON: The boobirds finally concede that it was a good one. And that the next one will be the end of the world.

US PRESIDENTIAL ELECTION: If an Obama win is priced into the market, would a Romney surge cause a stock surge? May be time to pick up another surge protector.

JAPAN: Hey Japan, how about giving the world some GDP growth one of these decades? Preferably this decade.

NATIONALIZATION:
What's mine is mine and what's yours is mine as Argentina and Bolivia are grabbing Spain's toys like the bully kids at playgroup.

FRENCH ELECTIONS: Socialism in, confidence-ism out.

THE CLIFF: I had a dream that a grand bargain was reached this summer that solved this impending US catastrophe. The Easter Bunny, Santa Claus, and the Tooth Fairy were brilliant and reasonable negotiators.

GREECE: They know that no matter what they do, we will all still go to their parties. Toga! Toga!

GOLD: Water-torturing its way toward a 20% bear market drop. Risk on? Risk off? Risk here!

CREDIT DERIVATIVES: There are some movies like Caddyshack, The Godfather and Forrest Gump that I gladly watch over and over. But this one... once was enough for me.

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.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
GLD, DIA and SPY.
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