MARKET TIBITS

If the economy is growing faster than the labor market, does that lead to inflation?

Real wages are stagnant. If they were any more stagnant they'd be pond scum. Toss in slight increase in hiring temps, fewer short-term unemployed and slight uptick in participation rate and you have an inverse relationship here. Sorta like asking do you want more economic freedom and less autocratic rule or the reverse?

If you have not guessed it, we favor the former. And if you look at the chart posted with our Fed Fiasco blog, you'll see another inverse relationship, that between employment or jobs and QE.

Simply put, observers see and read what they want. But as investors one must decide, especially if one's in the market for bonds. We've already shortened our duration. The risk of another global slowdown favors the long end of the curve; it also suggests the Fed would roll out perhaps some more easing. Our bet is the Fed is already behind the curve. But that's what makes for a horse race.*

Ten year T-bonds nearing Death Cross with the 50-day moving average threatening to dip below 200-day MA. We've been here before and it didn't happen. So what does it bode if it happens this time?
http://blogs.marketwatch.com/thetell/2014/04/04/10-year-treasury-yield-death-cross-could-signal-bond-rally/*

For another view on bonds and what to expect if rates rise http://www.marketwatch.com/story/dont-dump-your-bonds-when-interest-rates-rise-2014-04-04

Mid-term elections reportedly are dangerous times for the stock market some believe. Could a sell-off be in the offing? 
http://blogs.stockcharts.com/chartwatchers/2014/04/watching-for-a-spring-top.html *

A blurb in the weekend's WSJ says: "Private Employment Hits a New High, But Government Hiring Lags Behind." Now all we have to do is go out and create a bunch of government jobs. We all know how efficient government workers are. *

If the cure for high prices is high prices, then at some point things become cheap enough to bring out buyers. Think mergers and acquisitions here as two of Europe's cement firms contemplate a $50 billion dollar merger. Cutting overcapacity is akin to cutting home prices when there are too few buyers. The point here is one fine day the market awakens to realize there is no more overcapacity to be cut. The safe bet is the market will awaken long before central bankers. *