THE ENTRAIL CROWD

In ancient Rome predictions of future events would sometimes be based on an examination of the entrails of a sacrificial animal.

Most have heard of the in-crowd. But there's another group perhaps not so well known we call the Entrail Crowd.

Simply stated, these are those economic seers who read their econometric babble and come up with forecasts. Not much has changed notwithstanding the electronic evolution. Accuracy, in most cases, turns out to be missing more often than those unfortunate children with their pictures on milk cartons.

Just make sure in this case your investments are not the sacrificial prey.

http://blogs.marketwatch.com/capitolreport/2014/04/21/seventy-two-economists-polled-and-exactly-zero-see-economy-contracting-this-year/

SHORT TRUCE

Easter Sunday didn't keep things from heating up in the eastern Ukraine as gunfire broke out at one check point.
http://www.businessinsider.com/ukraine-rebels-call-for-russian-intervention-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

DEMAND FOR TIPS

In a few weeks one of the most famous sports sayings will once again be in the headlines at the Indianapolis 500: "Gentlemen, start your engines."
 
 A while back we unloaded most of our TIPS at a nice profit when the yields were getting weaker than new born kittens. Is this a wake-up call or just another false start? You be the judge.

Bloomberg: - The U.S. sale of $18 billion in five-year Treasury Inflation Protected Securities drew the strongest demand ever from a class of investors that includes foreign central banks.

Indirect bidders bought 58.4 percent of the securities at the TIPS sale. That compared with an average of 42.3 percent at the past 10 auctions. The bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.7, matching the highest level since December 2012. The notes sold at a yield of negative 0.213 percent, below the negative 0.162 percent average forecast of five of the Fed’s 22 primary dealers in a Bloomberg News poll.

“The stats were off the charts,” said Stanley Sun, a New York-based strategist at Nomura Holdings Inc., a primary dealer, said in a telephone interview.

The five-year breakeven rate (a rough measure of implied inflation expectations) jumped as a result.

BUBBLE LAND UK STYLE ?

Interesting read about the UK real estate market.

In the US banks are now softening their requirements for mortgages because most of the low, easy picked fruit has been picked in another case of bankers rewarding bankers. Fees and penalties have been hiked. Next?

So get thee prepared; this is just another step in the ever-on-going cycle. Know that there's plenty inflation around, deflation is a non-entity, costs are rising, labor shortages cropping up and wages are about to follow.

Years ago a famous cartoon character was famous for always repeating: "What me worry?" Well, rising wages will bring forth the worry worms in droves.

So what as an investor are you going to do about it? How and where and why are you going to hedge your positions?
http://soberlook.com/2014/04/a-uk-housing-bubble-or-something-else.html

AN APPROPRIATE READ

Here's an appropriate read for Easter.
http://www.bloomberg.com/news/2014-04-17/chocolate-egg-easter-surprise-is-sticker-shock-on-cocoa.html

IT'S ABOUT EARNINGS

Watch today for these heavy hitters to report their earnings.

Twenty-nine major US companies are scheduled to report, and all are significant. Notable reports includeHoneywell (NYSE:HON), General Electric (NYSE:GE), Schlumberger (NYSE:SLB), Blackstone (NYSE:BX), BlackRock (NYSE:BLK), Fifth Third Bancorp(NASDAQ:FITB), Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), Pepsi (NYSE:PEP), Chipotle (NYSE:CMG), Philip Morris (NYSE:PM), andAdvanced Micro Devices (NYSE:AMD).

MORE JANET EFFECT

Federal Reserve Chairwoman Yellen spoke again yesterday. You can click on the link for the full article. Meanwhile, here are some of the points she discussed and our comments. Draw your own conclusions.

--the only place inflation is below 1% is in the head of Chairwoman Yellen, a fawning media and a few quite dangerous bureaucrats.

--if you believe inflation is really below the Fed's 2% target, you have not been paying attention.

--hedge terms like "quite plausible" we will see full employment (whatever that is, since many disagree with the definition) and healthier inflation by the end of 2016 are further proof these people don't have a clue.

--her comment about more slack in the labor market than suggested by the unemployment rate begs the question how would she or any other of these financial seers then recognize full employment?

http://www.reuters.com/article/2014/04/16/us-usa-fed-yellen-idUSBREA3F1A420140416

IMPORTANT ECONOMIC INDICATOR

Capacity Utilization Chart

      Note the pick up in auto parts with low points and high points.

WAGE PRESSURE COMING

With spot labor shortages showing up, it can't be long before wage pressures start rising.

Higher wages in this whole economic recovery picture is the proverbial other shoe.

It's not something either the Fed or employers desire, at least not at this time. Sure the Fed will deny it, claiming they would like to see a little inflation to ward off any looming deflation. But be careful what you wish for. A little could easily turn out to be a lot after one of the greatest counterfeiting schemes of all time.

Truth is wages have been flat for years. And there's much pent-up pressure not to mention frustration and concern. Toss in higher minimum wages, food and lodging costs, retailers less inclined to just suck up higher production expenses and you're looking through the economic looking glass clearly now.  

Higher wages are the only real antidote for a shrinking dollar.

http://www.bloomberg.com/news/2014-04-16/tight-job-market-in-u-s-cities-prompts-higher-pay.html

FED FOLLY

We've been suggesting for some time now that when the Fed has played its final tapering ploy they will wind up behind the curve. Practically everything the Fed does conjugated with media mesmerizing plays down the threat of inflation.

Any and all price hikes, according to this chorus, are but mere aberrations notwithstanding that one of the country's largest workman's comp medical providers just raised its prices for the fourth time in three years.  

There ain't no hedonic potion here just hard, real facts. Nor are these increases munchkin-sized.

Calling it a scam would sound too cynical. Calling it what it is, bureaucratic fumbling and bumbling, guess work of the first degree, is less cynical and more accurate. And far more dangerous.

http://online.wsj.com/news/articles/SB10001424052702304640104579490022832019960?mod=hp_opinion&mg=reno64-wsj