Running On Empty

Today’s below-expectation employment report put paid to the much-vaunted idea that the weak reports in January and February were weather-related and therefore could safely be ignored.

The problem is that the stimulus efforts – deficits, QE and so forth have failed to produce an adequate recovery. The Gallup payroll to population ratio continues to decline. That’s all you need to know about employment.

At the current rate of “taper,” QE will end in October. At that point, the Fed will own 40% of all outstanding MBS and 25% of all Treasuries. That’s a deep hole to dig out of.

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