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European Debt, French Election Push Wall of Worry Higher


Let the headline tantrums begin! Investors around the globe are ready, expecting volatility to rule the markets.

MINYANVILLE EXCLUSIVE: It's headline risk-on mode as 2012 is a big year for global government elections and change. Capitalists versus socialists, dictatorships versus democracies, communists versus communists -- it's all news fodder for the averages as the Dow (^DJI), Nasdaq (^IXIC), DAX (^GDAXI), Hang Seng (^HSI) and the FTSE (^FTSE) are back into putting in plus or minus 1% daily moves. Next up, lots of economic numbers, unemployment concerns, election results, and most likely, intraday market volatility of plus or minus 2%. Are there pacifiers for adults?

This week, my Wall of Worry stands at 27 blocks, meaning the level of anxiety in the marketplace is high. Click on the graphic below for a short comment about each of the issues facing investors, or 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: Damned if we do, damned if we don't. The question is, when do we want to be damned?

US ECONOMY: And, action! "All ready and willing to take over as the core driver of world economic growth while China slows, please raise your hand." (America sits silently, eyes down, hands in pockets….)

UNEMPLOYMENT: The virtual marketplace is booming! Unfortunately, it only creates virtual jobs.

INVESTOR SENTIMENT: Hard to guage as there may not be any actual "investors" left. Though there may be one in the Smithsonian. I'll get back to you….

HOUSING CRISIS: Inventories high, delinquencies high, foreclosures delayed. Remedy? Housing starts rising -- build, baby, build!

CENTRAL BANKS: Herd mentality goes to government as we are about to enter the first-ever period of 100% participation in global liquidity pumping.

EUROPEAN ECONOMY: There's no need to fear, the German economy is here! Or was here, as it slips closer and closer to dropping below a "50 PMI" (Purchasing Manager's Index).

Member relations fraying a bit as French presidential election rhetoric goes populist. Shocking turn of events from politicians under pressure, huh?

SOVEREIGN DEBT: It's all about supply and demand. My guess is supply wins.

SPAIN: Olé! Another successful bond offering. Keep the red cape handy, though, as this debtor's bull fight is far from over.

10-YEAR TREASURY YIELDS: Back below 2.00% and drawing more investors than ever. Man, you just can't make this stuff up…unless you are the Federal Reserve, that is.

FINANCIAL INSTITUTIONS: Fighting for their future profitability as government encroachment zeroes in. Mr. Glass, Mr. Steagall, we have a call for you on line one….

VOLATILITY: BFF, thy name is VIX!

Lloyd: Heard a great quote.
HAL: Waiting.
Lloyd: "When fighting angry, blind man, best to just stay out of the way."
HAL: Guess that means you'll be taking off the next few months.

CHINA: Markets used to fear that China would take over the economic world. Now they fear it won't.

STOCK MARKET TECHNICALS: Back in the driver's seat as future fundamentals come into question. Buckle up and check the airbags.

IRAN: Working feverishly with global power players to delay a deal that would delay the suppression of their nuclear ambitions. We should know by June, unless the delay deal is delayed.

OIL PRICES: Brent hits $150 and it's game-over. Brent hits $75 and it's game-over. In between we can comfortably stay in high-fret mode.

INDIA: Got a new slingshot called Agni V that can launch a missile all the way to Beijing. May be time for the US to re-start its slingshot mission to Mars in case things ever get out of hand over in Asia-Pac.

EARNINGS SEASON: Almost done. But just as the last few flips and turns on the roller coaster are the ones that get to you, it's likely the final fear-for-our-lives screams are still to come.

US PRESIDENTIAL ELECTION: Let the hate, blame, and humiliation begin!

JAPAN: Market hoping and expecting a round of easing from the BoJ (Bank of Japan) on Friday, April 27. Gonna make for a nice weekend or a lousy one.

NORTH KOREA: Just across the fence, Mr. South Korea calls out to his wife, "Honey, our crazy neighbor is threatening to cut down our tree again!"

FRENCH ELECTIONS: Promises, promises, promises…give 'em if you got 'em because the critical May 6 election is gonna be all about them and not about reality, reality, reality.

THE CLIFF: As the Bush tax cuts expire on January 1, 2012, a combo meal in the US will include a Jumbo Tax Burger, a side of Sequestration Budget Cut Fries, and an Ice Cold Congressional Stalemate to wash it all down. Let's call it "The Not-So-Happy Meal."

THE NETHERLANDS: Netherlands literally means "Low Countries." Appropriately named as it joins the group of southern budget busters -- Spain, Italy, Greece, and Portugal -- which are all feeling low right now.

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, QQQ
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