How’s the U.S. economy doing?  Although you couldn’t tell from the muted reaction of the stock market, yesterday’s headlines were as discouraging as we’ve seen in a while. For starters, the supposed recovery generated a feeble 119,000 private-sector jobs in April — less than half the number required to recoup positions lost during the worst years of the still-potent Great Recession. The usual bunch of “experts” had “expected” 175,000 new jobs, but even with seasonal adjustments and some other statistical hocus-pocus, the Guvvamint’s able spinmeisters failed to deliver the kind of numbers that get incumbents re-elected. There was also news that factory orders in March fell 1.5% from February. Although this datum reportedly was in line with expectations, it hardly supports the Recovery drumbeat that has been growing louder and louder with each passing week.

So loud, in fact, that it has prompted speculation that the Fed might raise interest rates in, um…2014. This is the kind of idiotic blather that gives the mainstream media its comic appeal. We can understand why Bernanke and the White House would want to put the story in play, and why a lazy, economically ignorant press would eagerly swallow it like a fish tossed to a trained seal.  The story is intended to make all of us rubes think the Fed actually believes its own story that the economy is recovering. If this were true, however, why would They wait until 2014 to put a lid on inflation?  Managing expectations is all the bankers are trying to do, of course, but sometimes the way in which they do it feels so clumsy that we can be forgiven for thinking that Bernanke and The Powers That Be take us all for fools.  As for the notion that the Fed is planning to raise interest rates:  Yeah, sure.  The idea that the Guvvamint would subject a bazillion dollars of debt (and growing) owed by all of us — and by itself — to higher interest charges is so outlandish it doesn’t even warrant discussion.  As Bernanke surely understands, a mere 25-basis-point tightening now, or in two years, could trigger a deflationary collapse that would leave the financial system and global economy in ruins for a generation.

Europe in the News!

Meanwhile, the stock market only wants to go higher, and damn-the-torpedoes.  Weighing on the broad averages yesterday — although not on the U.S. dollar — were a slew of despairing dispatches on Europe’s slow-motion crack-up.  There are now seven countries officially in recession, and unemployment throughout the region has risen to a post-euro high of 10.9%.  Unemployment is rising even in Germany, which will find it increasingly difficult to avoid recession with its main trading partners sinking into an economic quagmire. Needless to say, anyone who began the day worried that such concerns might knock Wall Street for a loop must have felt relieved by the close, since the stock market took the news easily in stride. The Dow Industrials settled just 10.75 points lower and were never down more than 75 points. One might infer that investors are confident that the U.S. economy will keep chugging along even as all of Europe and a growing swath of Asia slip into recession. In actual fact, with the most spectacular credit expansion in the history of the world still in high gear, stocks are unable to go down more than momentarily, so pumped are they with the gaseous exhalations of the central banks. For all of you permabears whose hopes spring eternal, however, here’s our rally target for the E-Mini S&P futures: 1439.50. Although we can’t guarantee that’s where the Mother of All Bear Rallies will end, we’ll be shorting there aggressively ourselves — albeit with very tight stops  – if the opportunity should present itself.

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