Behind the Market’s Sustained Panic, 27 Grave Concerns The debt crisis in Europe tops the list of worries causing head-spinning volatility

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The market has seen gains over the past couple of days despite serious doubts about Europe’s economic future, a general crisis of confidence among investors and the fear that a global recession may be just around the corner.

"Lloyd’s Wall of Worry" stands at 27 blocks today, slightly lower than last Friday’s high of 30, but deep in the high-anxiety zone nevertheless. Value investors, while you wait for Friday’s announcement from Chief Bernanke, keep hunting for bargains. Panic is still priced into these markets.

Click on the graphic below to read about the specific concerns facing investors right now, or scroll down for a text-only version of this column and an explanation of how it works.

The 27 Concerns Facing Investors This Week (Text Only)

QE III: Introducing the first ever cryogenic interest rate. U.S. short-term rates will be frozen until mid-2013…at least.

U.S. ECONOMY: Lowering the bar again. Now best case scenario is +1% GDP, a.k.a. "Stall Speed."

UNEMPLOYMENT: The good news: Jobless claims are slightly down! The bad news: We are at the point where we actually get torqued-up about marginally improving jobless claims.

AUSTERITY: More and more countries are cutting their way to prosperity. And more and more countries are therefore kidding themselves.

INVESTOR SENTIMENT: Mom & Pop are likely gone for a generation. And the pros? They’re wondering what Mom & Pop know that they don’t.

HOUSING CRISIS: Is it possible for a market to crash two times in three years? Hmmm…let’s ask Mr. Stock Market and see if he has any thoughts on this.

INFLATION: "There’s a bad moon on the rise.

CRISIS OF CONFIDENCE: For those with it, it’s time to step up. For those without it, it’s time to step down, or at least step aside.

ARAB SPRING: Who’s left? Man, totalitarianism is so last millennium. LIBYA: After a 42-year run "The Mo-Mo Show" is about to be canceled. Likely replacement, "The Assad Project".

VACATION: I’m working. You’re working. Our leaders…watching.

CHINA: Engineering their own economic "soft-landing". My advice: Don’t rely on any of the old western world playbooks you may stumble upon.

U.S. CONSUMER CONFIDENCE: Hits a 20-year low. And when the U.S. consumer, responsible for 70% of the economy, says the $#*! has hit the fan, it’s time to duck and cover.

SOVEREIGN DEBT: How long can Europe keep rolling along by rolling its lifeblood short-term paper? We’re going to find out.

POLICY MISTAKE: Europe, you’re away. Fore!

EUROPEAN CENTRAL BANK: Rev up the printing presses to save the euro and the banks. Now where would they get an idea like that?

GREECE: "The greatest wealth is to live content with little." – Plato. So now the only thing left for the Greeks to do is to get content. Then it will be the wealthiest country in the world!

CREDIT CRISIS: Europe’s turn.

ITALY & SPAIN: Too big to fail. Especially in August.

ECONOMIC LEADERSHIP: "They want leadership, Mr. President (Mr./Mrs. Congress). They’re so thirsty for it, they’ll crawl through the desert toward a mirage, and when they discover there’s no water, they’ll drink the sand."   CONGRESSIONAL SUPER COMMITTEE: Big, bold, critical – and oxymoronic.

GLOBAL RECESSION: Not there yet, but misery does love company. Keep that in mind China, Brazil and India.

BANKS: Most now too big to fail…or succeed.

VOLATILITY: Buddhism teaches that everything balances out. Therefore regarding volatility, while last week was the worst week in market history, for Gastroenterologists it was the best.

MONEY MARKET FUNDS: Unquantifiable how unstable they are at the moment…like basically every other financial vehicle in the world.

HIGH FREQUENCY TRADING: With the 1937 market bottom in mind, they’re likely amassing $8-digit genius task forces to work on how to combat the inevitable day the Uptick Rule comes back. SHORT-SELLING BAN: Einstein on Insanity: "Insanity is doing the same thing, over and over again, but expecting different results." Exhibit A: U.S. Markets 2008. Exhibit B: European Markets 2011.

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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