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The Last Big-Dog Economic Number of the Year: The Friday Jobs Report

By

Overseas, concerns include a punky economy in Brazil, a whipped-up populace in Thailand and potential debt defaulting situation in Ukraine.

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After a two-month, near-heroic run, the S&P 500 (INDEXSP:.INX), the Dow (INDEXDJX:DJI) and the Nasdaq (INDEXNASDAQ:.IXIC) stock market indices have reversed course. A pause, a dip, a correction, who knows, might just be a post-Thanksgiving slog that we will have to live with for a while. As for the Wall, it continues to hold steady at a middling 15 worries. Not high, not low, just right up the middle like a bowl of vanilla ice cream with chocolate sprinkles. (There is an ice cream equivalent for all things.)

As the year winds down, it looks like there is really only one big economic, market-moving number left to come in and it drops this Friday. The change in non-farm payrolls at 8:30 a.m. is thought to be a potential influence on the Fed's asset-purchasing program. It's pretty safe to say that anything below 200,000 net jobs added and tapering by the Fed will still look like a 2014 event. The real market-moving news would be a number north of 225,000. The Taper Talkers will be squawking fast and loud, and the bond and stock markets may shudder a bit or more than a bit. We'll see.

Some concerns out there that haven't risen to standalone-worry level include a punky economy in Brazil, a whipped-up populace in Thailand and a potential debt-defaulting situation in Ukraine. These may wash away as quietly as they washed in, or they may build into some good-sized waves and hit the currency market shore hard, which could spill over into the US equity markets. Nothing to keep you up at night at this point; that's what you've got the Wall of Worry to do for you, anyway.

Here's a quick look at the worries facing stock market investors. Because of technical issues, this week's column features only the text version of the column. Scroll down for an explanation of how the Wall works.

QE: Does a 200,000+ jobs number mean the Fed's tapering starts in December? "Ah, you might Rabbit, you might."

UNEMPLOYMENT: Looks like the US Fed will stick with its 6.5% unemployment rate goal, which begs the question, what is the ECB using for its target?

US ECONOMY: We have seen the light! And it is a consistent 55+ PMI. Have mercy!

INVESTOR SENTIMENT: Gimme a "G," Gimme an "R," Gimme an "E," Gimme another "E," Gimme a "D," What's that spell? Greed! Say it again!? Greed!

EUROPEAN ECONOMY: They want and need growth but they don't want and don't need inflation. "To dream the impossible dream…"

HIGH-FREQUENCY TRADING:
Lloyd: I'm hearing you and your brethren are playing in the FX and fixed-income sandbox more than in equities these days.
HAL: True dat.
Lloyd: What are you using as a hedge?
HAL: Equities.
Lloyd: (heavy sarcasm) Wonderful.

CHINA: Will they or won't they project 7.0+% GDP growth for 2014? World economic leaders in a post-football-game prayer circle as we await an answer.

GLOBAL ECONOMY: It's still a US- and China-dependent world. Ergo, we continue to worry about it.

BONDS: So far it seems the only "Great Rotation" in bonds is from longer maturities to shorter maturities, as equities still appear too immature for the fixed-income crowd.

CONSUMER CONFIDENCE: US Michigan Confidence number coming this Friday, right on the heels of the Detroit bankruptcy hearing earlier in the week. Bummer.

RETAIL SPENDING: If everything I bought was "40-50% off," how did I manage to spend more than last year?

CONGRESS: December 13th is the deadline for a budget deal. Congressional aides are already ordering pizzas for 11 p.m. delivery on December 12th.

SEQUESTER II: Now don't go getting Little Timmy's hopes up just yet, but the second round of blind-as-a-bat spending cuts might not happen after all.

EMERGING MARKETS: Under the heading, "Thanks for sharing!" Brazil's got economic problems, Thailand has political problems, and Ukraine has debt problems. No one ever said emerging would be easy.

ECB: Taking suggestions for next year's bank stress test. Might I suggest making them spend a few days with my extended family in Boca Raton during the holidays?


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, QQQ, GLD, TBF, IWM, FEZ, EEM, EUO
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