I hope everybody had a nice Memorial Day weekend including remembering our Veterans that gave their lives for our great country. One quick fact, Memorial Day (first known as Declaration Day) originated after the Civil War to commemorate the Union soldiers who died in that war. Remembrances, BBQs, golf, sports, water, beach - it gave us a brief respite from the overseas news that has been dominating the business headlines.

Last year (in my weekly newsletter) I began writing about the “hostage crisis,” meaning that investors were being held hostage by the daily news out of Europe. Well, guess what? The hostage crisis is back and now there is a fixed date when we get a partial answer - June 17, about 3 weeks from now. That is the date of the next Greek election, where the leftist party is trying to unseat the current party that favors austerity measures and a bailout. On top of the Greek news, Spain now appears to be back in the crosshairs after the country was forced to give over $24 billion to rescue Bankia, one of its largest banks. Spanish bond yields are again on the rise and its stock market has dropped 25% this year.

Meanwhile, back here in the good old US of A, US stocks finally pulled out a winning week with the S&P 500 gaining 1.7%, the Dow rising .7% and the NASDAQ gaining 2.1%. Still, the Dow has been down 15 of the past 18 trading days. Last week I mentioned that perhaps we were due for a bounce and with the end of the month approaching we may be able to extend last week's gain another week (again, it depends mostly on the news out of Europe). Most impressive during the week was Wednesday when the Dow bounced from being down about 200 points to closing higher at the end of the day.

Last month I also talked about the "Wall of Worry" that investors face. I'd like to update the wall with some new and additional information. Below is a snapshot of most of the big issues on investors' minds.

• The Greece election looms and its place in the Euro economy is in peril. The  news out of Greece has gotten worse in the past month.
• Ripple effects - Spain is again in trouble and its banks are extremely weak and vulnerable. Italy, Portugal and Ireland loom in the background. Will there be a contagion?
• The Fed's Operation Twist winds down at the end of June. Will there be a QE3? No answer yet.
• China's economy is slowing but there are now hopes of a new China stimulus plan
• India's economy has slowed depriving the developing world of another growth engine.
• The recession will likely hit the EU the hardest in the summer. Seven of the
  17 EU countries are now in recession. Overall unemployment is about 11%.
• The US election looms in November and talk of the Fiscal Cliff we face will
  dominate the headlines. The potential fallout form the fiscal cliff is a
  big deal! Don't overlook it.
• The US economy is still fragile but housing news has been good lately. Will
  there be a double dip if Greece leaves the Euro and the contagion spreads?
• On the positive side, oil prices have declined and could give a boost to GDP
  if they stay in the $90s.
• Corporate profits were stronger than expected in the first quarter.

Here are some facts about the European economy that I picked up out of various articles I read. Eurozone imports (US exports to EU) are 2% of US GDP. Eurozone imports to the rest of the world are 5% of global GDP. The EU is the US's 3^rd largest export market accounting for 15% of American goods and services sold abroad. EU imports account for 3% of global GDP and 22% of EU GDP. So, the point is that a Euro recession is a big deal but actually may not be as devastating as the market anticipates. Remember that the EU economy will not come to a complete standstill. There will still be pockets of growth and consumption. So the effects on the world will be a percentage of its capacity, not the full effect.

Finally, a Facebook update. The stock dropped again and this has really been a fiasco. Terrible job by the underwriters and many analysts are coming out talking about how overvalued the company is. You may want to stay away until the dust settles.

NOTE: The above is a summary of the Forza Weekly Newsletter. Sign-up to get the full version for free at www.forzainvestment.com.

Bob Centrella, CFA, is President/Managing Partner of Forza Investment Advisory, LLC, a Registered Investment Advisor based in Westfield, NJ.  More information on Bob and Forza Investment Advisory can be obtained from www.ForzaInvestment.com

DISCLAIMER:  The material represents the views of Bob Centrella, CFA and the information is believed to come from reliable sources.  Although we have reviewed the material we can’t guarantee the accuracy and completeness of all the information.  Do not rely on this information alone to make investment decisions.  The information contained in this blog is not intended to constitute financial advice, and is not a recommendation or solicitation to buy, sell or hold any security. This blog is strictly informational and educational and is not to be construed as any kind of financial advice, investment advice or legal advice.  We urge you to talk to a financial professional before making investment decisions.