THIS MONTH'S WALL:
At nine blocks and falling, the Wall of Worry is in the low-middle range at the start of May, and the mood on Wall Street is one of cautious optimism. Although the environment for a rising stock market is still in place, the Wall stands only two blocks away from complacency. It's probably a good idea to start lining up positions to trim or sell.
The worries
1. U.S. economy: Who put the steroids in Goldilocks' porridge?
2. Inflation: Benign numbers, but if an anti-immigration bill passes, wage inflation is a mortal lock. Don't even think about ordering room service.
3. Oil prices: Touching $3 per gallon -- the magic level that cut the number of cars on the road by 4 percent last Labor Day weekend. You can (a) pay it; (b) not pay it; (c) put yourself on the waiting list for a Prius.
4. Interest rates: With "Easy Al" (easy to read, easy money, easy you-fill-in-the-blank) off ringing the personal-compensation register, it's Ben's show at the Fed. Two beeps and done, please.
5. Housing bubble: A waning concern with inventories up, prices down and new home sales volatile. Then again, denial can be a powerful drug.
6. Corporate earnings: Underpromised and overdelivered, even with once-dreaded stock option expensing finally factored in.
7. Iran: Tehran continues to win the propaganda war and won't back off any time soon. The market was much happier when the mullahs were just on "double-secret probation."
8. Consumer spending: The savings rate ticks off its fourth-straight negative month. Hmm, maybe you can EBay your iPod to buy a new Razr?
9. Yield curve: Like the Mini Cooper or Frye boots, the ten-year Treasury yielding 5-plus percent is back. Nostalgia sells with fashionistas, but not so well with investors.
Looking ahead
Liquidity: We prefer it loose and easy, like that favorite pair of sweatpants you only wear at home. Tighter liquidity, such as we had in early April, could mean it's time to eat less or exercise more.
The Bush administration: You could call the President a lame duck, but that's not fair to other perfectly harmless lame ducks all over the world. The market prefers strong signs of leadership.
Terrorism: The threat always lurks.
Iraq: Until all-out civil war shuts down oil production, the market can tolerate the situation.
Bird flu: Likely to land in the U.S. within a year or so. Best-case scenario: It will cause mild panic followed by mild denial followed by lamb for dinner.
