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Some folks have been dumpingglobal bonds again today (after disappointing retail sales in the US). But, can we just put the recent bump in interest rates into some perspective? Will the "bond bull" market eventually come to an end?  Yes, eventually. However, the catalysts needed to create the type of economic growth required to drive interest rates substantially higher, as we saw previous to the 1960-70's, are simply not available today. This will likely be the case for many years to come as the Fed, and the administration, come to the inevitable conclusion that we are now caught within a "liquidity trap" along with the bulk of developed countries.

What is extremely clear is that there is something amiss with the statistical headline employment and economic data. While there are indeed pockets of improvement, which should be expected following a recessionary contraction, there is a lack of widespread recovery. That sentiment is clearly reflected in every major poll of American's over the last year. What is important is that there is a clear disconnect between the financial markets, statistical economic headlines, and the reality of the vast majority of American consumers. So, riddle me this - what happens when that disconnect is eventually resolved?

"The White House’s story might have been written by Lewis Carroll: would bin Laden, target of a massive international manhunt, really decide that a resort town forty miles from Islamabad would be the safest place to live and command al-Qaida’s operations? It was inevitable that the Obama administration’s lies, misstatements and betrayals would create a backlash... High-level lying nevertheless remains the modus operandi of US policy, along with secret prisons, drone attacks, Special Forces night raids, bypassing the chain of command, and cutting out those who might say no." - Seymour Hersh

As investors, it is crucial to ignore headline statistical data and focus on the underlying data trends that affect the real economy. While it is currently "blue skies" for investors, there are clearly storm clouds forming on the horizon. It will be those who fail to take precautionary actions that suffer the worst of consequences when the storm hits.

CITIGROUP SAYS DOJ DECLINED TO PROSECUTE ON LIBOR RIGGING

One week ago when news hit that Houthi rebels had launched a rocket attack on a Saudi border town we said that "a Saudi response now appears just a matter of time, and one which the oil-trading algos are eagerly expecting, pushing Brent to within two dollars of $68." By response, we of course meant a land invasion since Saudi Arabia has already been bombing Yemen for nearly a month.  That "time" may have arrived, because as Al Arabiya reports, Saudi Arabia has announced that a "strike force has arrived on the border with Yemen, as the operation to quell Houthi militias in the country continues."

Earlier we detailed reports that The IMF was preparing a contingency plan in the event of a Greek default, and furthermore that Andrea Merkel was under increasing pressure to "let Greece go," and now, as Eurogroup ministers begin to gather for today's crucial 'deal-or-no-deal' meeting, Die Welt reports The Troika has 4 scenarios for Greece  - one positive and three increasingly negative ranging from the need for further bailouts to paying staff in IOUs and issuing a parallel currency.

Members of Angela Merkel's Christian Democratic bloc are pushing the Chancellor to let Greece leave the euro, with some lawmakers saying the EU would be better off without the Greeks. Meanwhile, German FinMin Schaeuble warns of "accidental" insolvency.

In 2003, Kevin Flanagan was an information technology employee at Bank of America. They told him he was being replaced with foreign labor, and he was ordered to train his replacement. After he completed his assignment, he was laid off. Then he went to the parking lot and shot himself.  That's "free trade."

If the government does not like the way that you are raising your kids, they will come in and grab them at any time without giving any warning whatsoever.  Of course this is completely and totally unlawful, but it has been happening all over America.

In welfare state America its virtually certain that through one artifice or another taxes will go up and the national debt burden will rise to crushing heights in order to keep the baby boomers’ entitlements funded. While Keynesians and Wall Street stock peddlers are clueless about the implications of this - it actually doesn’t take too much common sense to get the drift. Namely, under a long-term path of fewer producers, higher taxes and more public debt, the prospects for rejuvenating the previous historically average rates of real output growth are somewhere between slim and none - to say nothing of the super-normal rates implied by the markets’ current bullish enthusiasm.

This is how DB summarizes what has been the primary feature of capital markets this week - the huge move in European bond yields: "On April 17th, 10-year Bunds traded below 0.05% intra-day. Two and a half weeks later and yesterday saw bunds close around 1000% higher than those yield lows at 0.516% after rising +6.2bps on the day." Right out of the European open today, the government bond selloff accelerated with the 10Y Bund reaching as wide as 0.595% with the periphery following closely behind when at 9:30am CET sharp, just as the selloff seemed to be getting out of control, it reversed and out of nowhere and a furious buying wave pushed the Bund and most peripheral bonds unchanged or tighter on the day! Strange, to say the least. Also, illiquid.

If yesterday's laughable lack of volume (helped by the closure of Japan and the UK) coupled with hopes that the end of the buyback blackout period was enough to send stocks surging if only to end with a whimper below all time highs despite what is now looking like three consecutive quarters of Y/Y EPS declines according to Factset, today's ramp will be more difficult for the NY Fed and Citadel to engineer, not least of all due to the headwind of the overnight "incident" by China's stock bubble which saw the Shanghai Composite tumble by 4%, the most since January.

The best news for stocks is twofold: volumes continue to be lethargic with both the UK (May Day bank holiday) and Japan closed until Thursday (Golden Week), while the bulk of the S&P500 has now exited the stock buyback quiet period. As such, ignore record equity outflows - all the matters is that corporate CFOs, flush with brand news bond issuance cash, will tell their favorite Wall Street trading desk to buy stocks at just the right inflection point sending the market surging just as shorts once again test the downtrend and the 50 DMA.