TREATING LAB NUMBERS AND OTHER BRIEFS

In medicine one of the first things you're taught is never treat a lab number. Treat the patient.

The Bernanke-led Fed continues to treat a lab number, 6.5% unemployment. So Big Ben, beyond a feel-good factor, what's the magic in that number versus, say, 6.3 or 6.6 or 5.9? When you don't allow recessions to run their course, you're treating artificial economic numbers.

When Bernanke announced last week his proposed timeline for slowing down QE, he was playing the calendar game not the market game. They're different. The real market's based on the economy, the real economy.

Like all those New Year's resolutions people make every year, they're calendar events. And truth be told most fail. Bernanke's trying to slide one past you here. The lab number is artificial--6.5% unemployment--in an economy where job-force participation is at record lows.

What's really worrying Big Ben is the bubbles his QE-based plan are creating in paper assets and housing. There's really not much to toast here despite all the Wall Street celebrating up until last week.

As one Wall Street wag recently noted, "Housing is the bright spot. But even it is staring down the muzzle now of higher interest rates."

So here's the bottom line. We all know the danger associated with unintended consequences. But often overlooked by many are the dangers of intended ones.

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Spin and hype are four-letter words.

Politicians love to spin, MSM hype. These are givens. So how does one make sense of the market's reaction to what Big Ben Bernanke spewed forth this past week? The short answer is one doesn't.

The long answer is just look for disparities, opportunities. If everyone wants something usually it's either overpriced or over-hyped. Bargains are not often found sleeping on the new high list, notwithstanding what the technical or momentum crowd will tell you, though they have their point.

You find the bargains often on the new low list among the unwanted and discarded. There are about to be more of those coming on the market soon. As always do your homework. ________

What do you get when you open a mall in South China twice the size of the US's Minnesota Mall of America? A vacancy rate of 99% since opening in 2005.
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So where's the pain in all this?

Well, two places to look, and there are others like energy and gold mining, are both bonds--junk and municipals.

In the muni market, according to the WSJ weekend edition, quoting one fund manager: "Everybody wants a bid and nobody's looking to buy."

Other signs are several big public offerings in New York and California among others were postponed. Both of these once-over bought markets will correct and start coughing up higher yields that will entice some yield-starved investors start to hunting once the volatility dies down.
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