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Economic reports rolled in this morning before the market opened from around the world…and it doesn’t look encouraging.  The backbreaker was the ADP U.S. Non-Farm Employment report that indicated only 119,000 jobs added last month.  This was down from 201k jobs added in March and below expectations of 177,000.  The March number was originally reported at 208,000.  Funny how those initial reports always sound better!

Overnight, European economic numbers caused concern.  A quick rundown; Hungarian PMI 46.9, Spanish Manufacturing PMI 43.5, French Manufacturing PMI 46.9, German Manufacturing PMI 46.2, German Unemployment UP at 6.8%, European Union Manufacturing PMI 45.9, Italian Unemployment bounced higher to 9.8%, and European Union Unemployment rate at 10.9%

The Japanese monetary base actually shrank last month by 0.3% and the HSBC Chinese Manufacturing PMI was 49.3  Do these numbers represent a continent, or a world economy on the mend?

France’s election is this Sunday.  Candidates Nickolas Sarkozy and Francois Hollande face off in a two and a half hour televised debate this evening.  Hollande is leading but handlers have tried to lower expectations as he has no personality and less appetite for hard questions.  Sarkozy is seen as an excellent debater and has veered to the right to pick up followers of conservative candidate Marine Le Pen.  Le Pen has announced she will cast a blank ballot.

The Treasury Borrowing Advisory Committee has recommended that Floating Rate Treasury Bills should be issued by the U.S.  The Wall Street Journal reports the Treasury Department has not made a decision on the recommendation.  Floating Rate Treasuries would allow the government to issue debt that actually had negative interest rates.  Investors could pay the U.S. Treasury to buy their bonds.  Duh.

Economic reports will be the markets noose or stairway this week.  Tomorrow Initial Jobless Claims for last week come out before market open and Friday morning the Bureau of Labor Statistics “Official” Non-Farm Payrolls and Unemployment Rate.

Tomorrow the European Central Bank will announce interest rates going forward.  They are expected to remain unchanged at 1.0%.  Business Week has an article about Germany’s slowing economy, but the population is concerned about inflation.  A quarter point reduction in interest rates by the ECB could be an outlier tomorrow morning.

The mailbag:
Good analysis of Krugman's article.  It strikes me as a tale of easy money versus hard money. Both have consequences.  However, since we have a consumption based economy, making more and more money available to more and more people will always win.  With rare exceptions, politicians will not opt for any policy that will distress their constituents.  They'll be tossed from office otherwise.  Advantage Krugman—subsciber J.R.

John’s reply:  What the people don't understand is the "feel good" of 4% inflation leaves a nasty taste in your mouth and pocket.

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