Off to a Strong Start

We’re Off to a Strong Start in April

by Louis Navellier

April 9, 2019

April is seasonally the third strongest month of the year, thanks in part to new pension contributions in conjunction with the April 15 tax deadline. The S&P 500 began April with a 1.15% gain on Monday and a 2.06% gain for the first week of April. Our friends at Bespoke Investment Group pointed out that when the S&P 500 rises at least 1% on the first trading day in April, historically the S&P 500 has risen by an average 4.25% in April, 12.2% in the second quarter, and 21.32% for the next six months (the second and third quarters), respectively, during the nine previous such occurrences that have happened since 1945.

The Three Bears Image

As of last Friday, the S&P 500 has risen seven straight days, three straight weeks, and 13 of the last 16 weeks, with net gains of over 23% since Christmas Eve. I keep expecting a correction in this seemingly overbought market, but I’m not complaining! We remain in a “Goldilocks” economy of low inflation, slow but positive growth, and lower long-term interest rates (2.50% on the 10-year Treasury bond rate last Friday vs. 3.24% five months ago), so well-selected stocks remain the best place for our money.

In This Issue

Bryan Perry brings us some good news about how the news of a “Global Slowdown” is not only wrong but a product of glaring media bias. Gary Alexander brings us Part 1 of a two-part series on how the media lies to us with statistics – it pays to be skeptical of how the numbers can be twisted. Ivan Martchev updates his Deutsche Bank/U.S. Treasury rate correlation, with added comments on the Brexit crisis. Jason Bodner reports on the power of Growth vs. Value right now, while his MAP ratio shows the market is no longer overbought. Then I’ll close with a closer look at the Fed and the latest economic scorecard.

Income Mail:
The “Global Slowdown” Narrative is Losing Ground
by Bryan Perry
Less Whine and More Cheese Needed from France

Growth Mail:
Don’t Trust Statistics – Except Mine, of Course
by Gary Alexander
Polls “Push” the Answers They Want

Global Mail:
Rampant Eurozone Deflation Creates a Bizarre Deutsche Bank Correlation
by Ivan Martchev
Deutsche Bank for 22-Cents on the Dollar

Sector Spotlight:
Growth Trumps Value So Far in 2019
by Jason Bodner
MAP Ratio Exits “Overbought” Condition

A Look Ahead:
President Trump Wants to “Pack the Fed” With Allies
by Louis Navellier
Most Economic Statistics Show a Slight Slowdown in 2019

Income Mail:

*All content of "Income Mail" represents the opinion of Bryan Perry*

The “Global Slowdown” Narrative is Losing Ground

by Bryan Perry

As first-quarter earnings season is about to get into full swing, there is great consternation about how a stock market can rally to within 2% of its all-time high and not respect the “lower growth” forecasts for forward GDP, sales, and profits for S&P 500 companies. Every time the market finds itself back-peddling over concerns of the IMF, the WTO, the World Bank, and the ECB lowering their growth forecasts, those fears are quickly dispelled by a confident U.S. Federal Reserve that life here at home is pretty upbeat.

The Fed sounds like they are living on their own little island. Perhaps they haven’t read the most recent headlines that have focused on the slowing global economy. These headlines read like the sky is about to fall. In just the past month, some of the top stories about the global economy had headlines like these:

Global economy enters ‘synchronized’ slowdown

Financial Times, April 6, 2019

World economy lurches from uneven recovery to synchronized slowdown

– Brookings Institution, April 5, 2019

Markets drop sharply as fears of global slowdown intensify

The Guardian, March 22, 2019

Global economic slowdown looms, exposing outgunned central banks

 – Washington Post, March 7, 2019

It seems like the financial media just can’t get enough bad news to print. Every day when I pull up the latest headlines on my iPhone for Bloomberg and CNBC, there is an enormous focus on what’s wrong with the world and very little attention given to what is going right. The media ignore any news about the level of prosperity under the Trump administration. They just can’t seem to do their reporting job honestly – reporting responsibly about financial markets, while putting their bias-spin into op-ed rants.

For example, the Brookings Institution used to be regarded as a “fair minded” ivory tower think tank in Washington, one that embraced “open minded” values. But Forbes recently conducted some in-depth research that would prove otherwise, revealing that BI is fully engaged in “pay-to-play” political-agenda-driven research. In “Brookings Institution – The Progressive Jukebox Funded by U.S. Taxpayers” (Forbes. June 2, 2018), the “open minded” think tank resembles something more like “open wallet.”

This is disturbing, as Brookings once carried the mantel of being an honest broker of critical fact finding, which both political parties could depend on. But Forbes says that this old culture is gone. “In many cases, Brookings doesn’t resemble a think tank, but a jukebox – add a little coin and Brookings will play your tune, if the price is right.” Forbes “found several examples of public-sponsored funding suggesting that Brookings is less of a think tank and more of a public affairs shop for establishment-left donors and allied government officials.”  So, should investors be shocked when Brookings releases a grim chart (below) of their proprietary Corporate Index of Relative Strength of a Range of Indicators? I think not.

Relative Strength Composite Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Less Whine and More Cheese Needed from France

Misery loves company. That was spelled out in last week’s CNBC interview with IMF managing director Christine Legarde, who said the IMF would cut its growth forecasts this week. Sounds like she missed the latest round of upbeat manufacturing data out of China before she made her remarks and failed to notice that global equities were at their highest levels in six months after a second batch of data showed the China services sector rose to a 14-month high in March – all while tariffs continue to be fully in place.

Christine Legarde should also heed some positive forward-looking data in her own native country of France, where for 2019 -2020 the labor market and consumption growth are forecast to strengthen!

Positive Forward-Looking Data in France Charts

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The U.S. stock market is trading near all-time highs because there is a growing consensus that the first quarter of 2019 will mark an earnings bottom for the S&P 500. I find the recent movement of the Morgan Stanley Capital International (MSCI) index of global equity markets to be eyebrow-raising. Shares of the EAFE iShares MSCI ETF (EFA) traded above their 200-day moving average three weeks ago. Then they retested that technical support level and moved to a new 6-month high this past week (see chart, below).

iShares Morgan Stanley Capital International Exchange Traded Fund Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

A 20-year chart of EFA shares tells quite a different story than the one being perpetuated by the bears. If the global slowdown camp that is pumping out headlines fueled by left-wing research – which is owned and operated by liberal-thinking networks – can’t get the markets to roll over by now, they’ve lost not only their bite, but their street credibility. The media will lie – they do all the time – but markets don’t lie and it is becoming more clear by the day that a free-market capitalist America is leading the global economy out of a soft-patch and back to better health.

Vive L’America!

Growth Mail:

*All content of "Growth Mail" represents the opinion of Gary Alexander*

Don’t Trust Statistics – Except Mine, of Course

by Gary Alexander

“In earlier times, they had no statistics, and so they had to fall back on lies…giants or miracles or wonders! They did it with lies and we do it with statistics, but it is all the same.” – Stephen Leacock

In high school, I read this delightful little book, “How to Lie with Statistics,” by Darrell Huff (1954). It was adorned with cartoons and humorous examples. I was always good with numbers, so I made up ways to bend the truth with warped numbers. In college, I studied statistics more seriously with some books which I still consider the standard for critical thinking: “The Nature of Statistics” by W. Allen Wallis and Harry V. Roberts (1962), and “Preface to Critical Reading” by Richard Altick (1956) – a real gem.

Here’s a sample of How to Lie with Statistics, turning a small rise into a steep rise by changing the axis:

How to Lie with Statistics Charts

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

In my early career, I kept critiquing the misuse of statistics by other writers so much my editor named me the “Elder Statsman” (at age 25) and assigned me the job of vetting all statistical usage, but now that I am truly elder, I think I’ve seen it all. Journalists routinely say “statistics prove…” as if numbers have logical content. The use of numbers lends authority, even though the most carefully-tended statistic in the world – the U.S. Census – is off by about 15 million. Next April Fool’s Day (April 1, 2020), your friendly Census Bureau will ask 330 million Americans hundreds of questions (on the long form) about our utility bills, health, race, job, income, phone, computer type, and endless trivia. Our billions of estimates, wild guesses, and misinformation will forever and henceforth be treated as Gospel Truth by statisticians.

Meanwhile, 10 million or more illegal aliens and five million or more ornery or homeless folk will never get a form or will throw it away, despite every attempt by sincere poll takers to tally every American.

Don’t get me wrong. Some statistics are invariably honest and true – baseball averages, the S&P 500, the day’s temperature highs and lows – objective numbers that can be measured by numerous observers. I’m talking about numbers that ultimately depend on some people asking other people what they are up to.

People lie. In a province of China, one census taken for military and taxation purposes showed a total population of 28 million, but a few years later a census of the same province for purposes of famine relief showed 105 million. People evade military service or taxes, but they seek out any benefits or handouts.

The same thing happens when census takers or pollsters ask about your income. Do you really want them cross-checking with the IRS?  No, you low-ball your income, just a bit. This difference makes its way onto our tax forms. The “tax gap”—the difference between what we owe the IRS and what the IRS collects—is about $450 billion a year. The IRS collects only about 81.7% of the money we legally owe.

Internal Revenue Service Gross Tax Gap Bar Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The same goes for employment stats: Are you looking for a job? “Sure, I am!” (I’d sound lazy if I said no. Besides the definition is so loose that if I make one call a month to a potential employer, I’m “looking.”)

Polls “Push” the Answers They Want

Last Friday, I received an official-looking poll in the mail, “Voter Registration Confirmation,” with 14 questions. Once I got to the third or fourth question, I knew they were “pushing” me into their desired answers: “Rate President Trump’s performance on getting the economy going, creating millions of jobs,” or “Rate President Trump’s performance on crushing ISIS.” You know the answer they want, so when you see a press release that 83% believe Trump is doing a great job crushing ISIS, you know the source.

These are called “push polls,” since they push you into their preferred answer. The same kinds of skewed results can happen in sincere polls that are badly designed, such as those seeking an answer from “the man on the street.” Which street? Park Avenue or Skid Row? Main Street, or Martin Luther King Blvd?

Pollsters also impact the answer. That’s why so few polls predicted a Trump victory. It was considered gauche to like Trump, so when asked by a pollster, many favoring Trump would say “undecided.”

There was a famous political poll by The Literary Digest in 1936. They sent out 10 million ballots, of which 2.4 million were returned, showing that Republican Alf Landon would handily defeat incumbent Franklin Delano Roosevelt. As it turned out, FDR won the greatest landslide ever, 523-to-8 in electoral college votes and 61%-36% in popular votes. What went wrong? The Literary Digest had successfully conducted election polls in five previous contests, 1916-1932, but they hadn’t contended with the wealth gap of 1936. Their mailing list was composed entirely of magazine subscribers, automobile owners, and telephone users – the affluent half of America – and responses favored those who could afford a stamp.

This polling failure led directly to the demise of the Digest in 1938 and the ascent of George Gallup, who had designed a far more accurate polling technique during that same 1936 election. (To be continued…)  

Global Mail:

*All content of "Global Mail" represents the opinion of Ivan Martchev*

Rampant Eurozone Deflation Creates a Bizarre Deutsche Bank Correlation

by Ivan Martchev

As German 10-year bunds were headed towards their first dive into negative territory in 2016, courtesy of the epic Brexit disaster and the overall deflationary environment in the eurozone, the stock of the largest bank in Germany – and one of the largest in the world – was trading with a truly bizarre correlation to the 10-year U.S. Treasury yield. If you think about it, the risk-free interest rate in United States Treasury bonds should have very little to do with the clobbered equity of a large European bank, but the explanation is surprisingly simple. The deflationary black hole that German bund yields sank into is what is ailing Germany’s Deutsche Bank (DB), and that very same black hole is pulling Treasury yields lower.

Deutsche Bank Bunds Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

On the chart above, you can see that this correlation “broke” in early 2018, courtesy of the Trump tax cuts that pushed U.S. economic performance into overdrive last year. This is the same overdrive phenomenon that caused the Federal Reserve to accelerate the pace of its quantitative tightening, resulting in upward pressure in short-term U.S. interest rates and regrettably sharply rising volatility in the U.S. stock market. The only other time we have had such a sharp contrast between fiscal and monetary policy was in 1987, during the Reagan administration, when the stock market crashed, but without an economic recession.

Last year’s “tax-cut sugar high” in the U.S. economy seems to be abating this year, so the Deutsche Bank 10-year Treasury correlation is being re-established, particularly with the Federal Reserve’s dovish pivot, in which the central bank has moved to the sidelines when it comes to any fed rate hikes and has declared its plans to stop the runoff of bonds from its balance sheet later in 2019.

Ten Year Constant Maturity Rate Long Term Government Bond Yields Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The question now is: Will German bunds keep pressuring Treasury yields lower and hence maintain that Deutsche bank correlation? The lowest German bund yields have been -0.19% in July 2016, when they pulled the 10-year Treasury yield down to 1.31%. Since 2016, the Treasury-bund spread has kept expanding with better economic performance in the United States and a continued deflationary trend in the eurozone. I suppose with a hard Brexit and continued good economy in the U.S., the German 10-year bund yields can go to a fresh all-time low and the Treasury/bund spread can go over 3%, despite being at multi-decade highs. The way these spreads work is that they tend to revert to the mean in a more normal economic environment, although the situation in the eurozone is anything but normal at the moment.

Deutsche Bank for 22-Cents on the Dollar

Deutsche Bank has a book value per share of 0.22 at present. What that means is that, under a theoretical liquidation, you are paying 22 cents for what would be one dollar of book value in return. In reality, book values are a significantly more nebulous metric for large banks than they are for operating companies.

Comparisons with Lehman Brothers are easy to make, due to the performance of the share price, but Deutsche Bank has been in “Lehman territory” for quite a while. Plus, DB is at least three times larger than Lehman when it comes to the size of its balance sheet and it is literally “too big to fail” when it comes to the German economy. It is no wonder that German regulators have urged Deutsche Bank and Commerzbank to start merger talks. I suppose that the Commerzbank valuation, at 0.33 in book value per dollar, is 50% higher than Deutsche Bank, but that is because it is a more “pure” bank, with a smaller international presence as well as investment banking and capital markets businesses.

(Navellier & Associates does not own Deutsche Bank or Commerzbank in managed accounts or our sub-advised mutual fund. Ivan Martchev does not own Deutsche Bank or Commerzbank personally.)

Germany Ten Year Government Bond versus Japanese Ten Year Government Bond Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

I am not sure how merging two sick banks will make one healthy bank. In Japan, the Bank of Tokyo-Mitsubishi did merge with UFJ and not much changed for the profitability of the overall operation. The “Japanification” of European financials is rather obvious and with the deflationary backdrop in the eurozone, which is likely to get worse in the case of a hard Brexit, one can expect the combined Deutsche-Commerzbank entity to perform no differently than the Mitsubishi-UFJ Financial group.

Mitsubishi-UFJ Financial Group Index Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

I don't know what will happen with Brexit, but I am by now tired of the soap opera that is playing out in the House of Commons. There is no doubt in my mind that the British shot themselves in the foot by voting to leave the European Union (EU) for fear that Germany was using the EU for its own political and economic interests and was growing too dominant. Didn't Britons understand that leaving the EU makes Germany even stronger within the EU? Those City of London jobs already leaving for Frankfurt may get more numerous if a hard Brexit end ups being the ultimate result.

In the end, the EU without Britain is a weaker institution. Both Britain and the EU are worse off after this acrimonious divorce and the risk of a breakup of the EU has notably increased, which means a breakup of the euro is no longer a low-probability event. In that regard, financial companies in Europe will trade at depressed valuations for as long as the EU is a malfunctioning confederation – which could be a while.

Sector Spotlight:

*All content of "Sector Spotlight" represents the opinion of Jason Bodner*

Growth Trumps Value So Far in 2019

by Jason Bodner

Sometimes things are not what they seem. For example, The UN’s initial purpose was to win WWII. The term “United Nations” was coined by President Franklin D. Roosevelt in the “Declaration by the United Nations” on January 1, 1942, just after America entered WWII, when representatives of 26 nations pledged to fight together against the Axis Powers. The peacekeeping angle only came later, after the war.

Declaration by the United Nations Image

Our primary institution dedicated to world peace got its start as a win-the-war exercise. Life is often counter-intuitive. Humans want stability, but things don’t often go the way we feel they should.

Remember late December 2018, when it seemed like we were headed straight into a bear market? Growth was over. Depressed markets were “still overpriced” in some pundits’ views, as they hit fresh lows. The mood was dour, the situation dire. Many concluded that the long bull market had finally died.

But just as many fell for the market’s death, it perked up, said, “Just kidding!” and got up and scampered away as fast as it could. I’ve published this table, below, throughout the new year, with that right-most column showing a frisky rising market that’s saying, “I have somewhere I have to be, and it’s not down!”

Standard and Poor's 500 Sector Indices Changes Tables

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

I know it’s boring by now, but the recent growth is mostly Growth! That’s right – Growth is back. Growth is king again. The poison pill that was supposed to undo global stocks in 2018 is the all-conquering hero of 2019. For those who got spooked, selling or switching to defensive sectors proved a costly mistake. The S&P 500 Growth index is the biggest S&P performer since the Christmas lows.

The NASDAQ Composite is the biggest broad index performer in the same time, up 28.2%. The Russell Growth indexes are whipping Russell Value by eight points. Infotech, Discretionary, and Industrials are the leading sector indexes. Utilities, Health, and Staples lag notably. Finally comes the powerhouse PHLX Semiconductor index – up almost 6% last week and a massive +38% since Christmas.

This should leave no doubt as to what is pushing this market higher – Growth. Let’s review:

First, remember that the MAP Ratio we calculate every day measures unusual institutional buying versus selling on a 25-day moving average, meaning we tally up unusual buys and sells and make a daily ratio, then we take the 5-week average. That allows us to identify overbought and oversold points.

So, when the MAP ratio went oversold in late December, that was our “everyone back in the boat” signal. The rally started and the ratio screamed higher. When we went “overbought” on February 6th, I said it could stay that way for a quite a while, and it did. That ratio peaked on March 1st and it fell steadily since. The market exited overbought on March 27th and is currently in neutral territory (see table below).

MAP Ratio Exits “Overbought” Condition

MAP Signals Ratio Table

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

So, what does a 78-79 reading mean? Well, it means that we are still seeing outsized buying. The buying outnumbers sells significantly, but not enough to be unsustainable. That’s good, because that means we are in a healthy zone for a continued bull. When the ratio is in the 60s or 70s it’s a healthy and sustainable ratio of buying to selling. If there is 78% buying versus selling, it stands to reason that market prices will trend upward. And that is precisely what we are seeing.

Russell 2000 versus MAP Signals Ratio Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Remember all that ETF selling I used to talk about? The market got spooked, plain and simple, in late 2018. The jitters caused a technical collapse and forced ETF selling, which peaked at the market trough.

Russell 2000 versus Exchange Traded Funds Buy and Sell Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

If you look at the green bars to the right in the above chart, you’ll notice that we are beginning to see ETF buying return, with little hint of selling. That means the massive capital outflows out of ETFs preceded a new rush of capital into ETFs. Buying is nowhere near as intense as selling, which indicates there may be plenty more buying to come. We believe all that ETF selling caused the intense stock selling in late 2018.

Russell 2000 versus Stock Buys and Sells Chart

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

On Friday, we noticed that 17% of our tech universe was being bought, a large number. Crypto, China, and Global stocks are rallying, setting up a nice continued rally. Prior pain-points are leading us higher.

The UN was a fighter before it was a peace-keeper. The market low was a trigger for a new bull market.

Before you decide where the market will go next, think of Tommy Cooper, who said, “I used to think I was indecisive, but now I’m not so sure.”

Tommy Cooper Image

A Look Ahead

*All content in this "A Look Ahead" section of Market Mail represents the opinion of Louis Navellier of Navellier & Associates, Inc.*

President Trump Wants to “Pack the Fed” With Allies

by Louis Navellier

On Friday, President Trump called for the Fed to cut key interest rates and resume quantitative easing to stimulate economic growth. I should add that President Trump seems very frustrated with the current pace of economic growth. Herman Cain is his latest nominee for the Fed, so between Stephen Moore and Herman Cain, President Trump wants to place two of his allies on the Federal Open Market Committee.

Currently, the Fed is still conducting quantitative tightening as it shrinks its balance sheet. Normally, there is no need to do quantitative easing when interest rates are positive, but when key interest rates approach 0% or negative – like they are in the Eurozone – then quantitative easing is a “last resort” to stimulate economic growth. Frankly, I expect the FOMC will ignore the President’s call for quantitative easing, as he seems to just be setting up Chairman Powell to be a scapegoat for the economic slowdown.

The Treasury yield curve is no longer inverted but it remains remarkably flat and could invert again if there is another Brexit-related crisis. Over the last few months, British Members of Parliament (MPs) have voted “no” on virtually every Brexit proposal and essentially refuse to implement the referendum that British citizens voted for nearly three years ago, so another referendum may be forthcoming.

The truth of the matter is that the MPs do not want to leave the European Union (EU) and are ignoring the will of the people. In the meantime, more members of Prime Minister Theresa May’s cabinet continue to resign, so it is just a matter of time before she also resigns. The bond market remains hypersensitive to any Brexit developments. In the interim, foreign capital is pouring into the U.S., suppressing Treasury yields.

Most Economic Statistics Show a Slight Slowdown in 2019

Manufacturing and Printing Image

The economic news last week was mixed and mostly down, but let’s start with the good news. The Institute for Supply Management (ISM) announced that its ISM manufacturing index rose to 55.3 in March, up from 54.2 in February. This was a pleasant surprise, since economists were estimating that the ISM manufacturing index would come in at 54.6. The new orders component rose to 57.4, up from 55.5 in February. Fully 16 of the 18 industries surveyed expanded in this very upbeat manufacturing report.

On the flip side, on Wednesday, ISM announced that its ISM service index declined to 56.1 in March, down from 59.7 in February, making March the lowest monthly reading for the service sector in 19 months. Any reading over 50 signals an expansion, so the service sector is still growing, just a bit slower.

This service sector slowdown was reflected in the Commerce Department’s report that retail sales fell 0.2% in March, the second decline in the past three months. Abnormally cold weather was blamed for the decline, but January retail sales were revised to a 0.7% increase, up from 0.2% previously estimated. Such big revisions in retail sales indicate that severe winter weather can adversely impact how accurately statisticians calculate retail sales, but as the weather improves, sales data should become more reliable.

On Tuesday, the Commerce Department announced that durable goods orders plunged 1.6% in February, due largely to a 31% decline in commercial aircraft orders. Excluding transportation, durable goods orders rose a minuscule 0.1%. Core orders for durable goods declined 0.1% and have declined in five of the last seven months. There is no doubt that businesses are now more cautious after last year’s spending spree from the corporate tax cuts. Core orders have been flat in the past three months. It is imperative that Boeing resolve its 737 Max issues before durable goods can significantly improve. I am confident that the 737 Max software will be fixed soon, since Boeing does not want to jeopardize its massive order backlog.

(Navellier & Associates owns Boeing in managed accounts and our sub-advised mutual fund.  Louis Navellier and his family do own Boeing in personal accounts and via an investment in the Navellier Mutual Fund.)

Finally, the Labor Department reported Friday that 196,000 payroll jobs were created in March, which was better than economists’ consensus expectation of 175,000. The February payroll was revised up to 33,000 from 20,000 previously estimated. The unemployment rate remained unchanged at 3.8%. Average hourly earnings rose by 0.1% or 4 cents per hour to $27.70 per hour in March. Wages have risen 3.2% in the past 12 months. The labor force participation rate declined to 63% in March from 63.2% in February.

Due to slow wage growth and falling labor force participation, this was deemed a very dovish payroll report. I should add that ADP reported on Wednesday that only 129,000 private payroll jobs were created in March – the weakest monthly increase in 18 months. Taken together, there is no doubt that job creation has slowed dramatically, so we are in the midst of a “Goldilocks” environment of steady economic growth and an accommodative Fed, which is great for continued low Treasury yields.


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