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World in Crisis, G20 Sips Cocktails


Our leaders are getting some distance from the maddening crowds. Meanwhile the equity markets have gone into full gyro mode.

MINYANVILLE ORIGINAL So tell me, what global financial tsunamic hell storm couldn't be solved with a hip-swinging, sweat drenched, tequila shot-swilling conga line?

This one, my friends, this one.

While our leaders are in Cabo San Lucas, getting some R&R and distance from the maddening crowds, the equity markets have gone into full gyro mode. Daily 1% swings in the Dow (^DJI), S&P (SPY), and Nasdaq (^IXIC) are back, to say nothing of the near 2% wingdings in the DAX (^GDAXI), IBEX 35 (^IBEX), KOSPI Composite Index (^KS11), Nikkei 225 Index (NKY) and any other Asian market of your liking.

While volatility continues to be a daily beef, gold (GLD) is largely staying out of the fray and actually catching something of a walking-up-a-staircase bid. Coming up this week we have a major FOMC meeting on June 20, jobless claims, housing starts, and everyone's latest economic buzz-word du jour, a PMI number from the US ("preliminary" as it may be).

The good news is -- and it really is good news -- there were no cardiac-arresting, frontal-cortex-twisting events this weekend to disturb whatever market detox ritual you perform to decompress before another five days of financial seizures.

So don't give up as all hope is not lost. Though it is darting around like a rabid squirrel on a cruise ship heading for Cabo San Lucas. Did someone say "Cabo!?" Shots!!

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

(Click on image to expand graphic.)

QE: C'mon Summer Santa Ben, put something shiny and new in our stockings, for we have been good boys and girls (crossies count).

US ECONOMY: Don't panic but the industrial production number just went negative. On second thought, panic a little.

UNEMPLOYMENT: Will the US see a 10-handle on its unemployment rate before it sees a 6-handle? Getting that sinking feeling....

INVESTOR SENTIMENT: Think it can't get worse? Raise the tax rate on dividends and people will have more love for professional boxing judges (did you see that Pacquiao-Bradley fight?!) than the bits and pieces of companies we affectionately call stocks.

HOUSING CRISIS: "We're in a definite type of situation here." Could there be a better subject for a Woody Allen quote?

All hail! You're collectively crowned the largest hedge fund in the world!

You know things are bad when the citizenry is publicly wailing about the sorry state of the normally robust black market.

THE EUROPEAN UNION: My brother-in-law Jon says we're using the Lionel Richie model. Richie is Germany, the key man and lead singer, and all the EU other countries are expendable, synchronized dancing Commodores.

SOVEREIGN DEBT: Channeling F.D.R.: "...never before have we had so little time in which to do so much." Striking how much one Depression looks like another.

SPAIN: The money ball gets passed from the ESM/EFSF to the "FROB" (Fondo de Reestructuracion Ordenada Bancaria) to Spanish banks. It does worry me when organizations with Hobbit-sounding names are a key link in the chain saving the world's financial system.

10-YEAR TREASURY YIELDS: You couldn't give them away at 15+% in the early 1980s, and in the 2010s, you can't keep the shelves stocked for more than a day. How's that efficient market theory thing working for you right now?

FINANCIAL INSTITUTIONS: Selling what they can sell, cutting what they can cut, hiding what they can hide.

We're back to riding the daily 1% up, 1% down teeter-totter.

Lloyd: How'd the speed dating go?
HAL: I won.
Lloyd: It's not a contest.
HAL: Now you tell me.

Residential housing market drooping as China's "imitation is the highest form of flattery" strategy, re: the US and Europe, takes a seriously mistaken tact.

STOCK MARKET TECHNICALS: The Chewing Gum Rallies continue. They don't last long, they don't taste too good, and you don't really know when they will run out or what to do with them when they do.

"Hmm, do I want the Danish or the cheesecake, the Danish or the cheesecake, Danish, cheesecake, Danish, cheesecake…?" "Just make a decision already!!!" The similarities between going for dinner at Miami's Rascal House with my grandparents and watching Germany figure out what to do with the euro really blows my mind.

GLOBAL ECONOMY: "We will all go together when we go, what a comforting fact that is to know…"

INDIA: May be the first BRIC country (Brazil, Russia, India, China) to lose investment grade status, which would leave us with the less potent acronym "BRC." Leaving me saying, "Pat, I'd like to buy a vowel."

TOO BIG TO FAIL BANKS (TBTF): Start making your "Too Big To Fail Bank" lists now Spain, Italy, Portugal, Greece, France.…

US PRESIDENTIAL ELECTION: The average cost per vote in 2008 was about $8.50. This time around I ain't puttin' on my fuzzy slippers for less than a sawbuck ($10). I mean, a man's got his self-respect to think of, don't he?

CREDIT MARKETS: The vigilantes are back and they brought a hefty picnic basket of inedible 7+%-yielding Spanish 10-year bonds. Buen apetito!

BANK RUNS: Europe's "What, me worry?" attitude regarding the current bank runs will work until the bank runs start happening in France and Germany. At that point, we all worry.

THE CLIFF: Question: Why would you knowingly drive off a 1,000-foot cliff guaranteeing disaster for you and everyone you know?
Answer: Because your political party told you to.

GREECE: Here's a real shocker -- there is no Greek god of money.

The favorite economic indicator du jour. And du jour, they stink.

Hmm…may be time to get into the currency printing business just in case. (See Amid Euro Crisis, This Company is Literally Printing Money.)

ECB: "Ooh, I got work to do, I got work baby, I got work to do, I got a job yeah…"

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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Positions in SPY, DIA, GLD, QQQ
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