Ethan Harris Market Quotations

Ultimately, for the economic recovery to sustain itself, we have to see the labor market improve. As the tax-cut benefits fade, consumers will look for more fundamental reasons to spend money, and there will have to be some job growth.

What we're assuming is that as the Fed hikes rates, the bond market gets pulled along.

If the Fed isn't happy, the market isn't happy.

We've been trying to see whether the improvement of the economy and financial market will carry the day in terms of consumer confidence, or if worries about labor will dominate. It looks like the 'glass-half-full' view is winning.

While the Fed is more than one person, Mr. Greenspan's retirement means less confidence in the Fed, with somewhat greater risk of both financial market instability and inflation.

What happened is that initially the market breathed a sigh of relief when the storm was downgraded to a Category 4 and missed New Orleans, ... they are starting to look at the damage more seriously. We are seeing further upward pressure on oil prices. People are starting to think about the many aspects of the destruction here.

Real estate is a topic that has vaulted to center stage, ... The real reason the topic is hot and belongs on the front page of research reports is that the housing market is becoming more of an engine of economic growth, but is also the biggest risk to future growth if the boom goes bust.

There's a chronic risk to the bond market from global economic recovery. Probably the most potent story is Japan.

This large inflow is an important prop for the Treasury market, helping keep yields in their current low trading range. Not only is the inflow large relative to new Treasury supply, it may also help stabilize the market when it comes under pressure. If investors start to shy away from the U.S. market, the dollar comes under downward pressure and the Asian central banks pile in to support the U.S. market.

It's true there's been a shift of income distribution, with a lot of income gains accruing to upper income individuals. The labor market is paying a bigger and bigger premium for being well educated, ... At the other end of the distribution, if you look at Joe Six-Pack, you've seen a big decline in big paying, low skill jobs in manufacturing.

The bond market went into this report looking for disaster. I think there's a sense of relief in the bond market.

The indicator that economists use to predict the housing market is the affordability index -- the ratio of monthly income to monthly mortgage payments. As the economy picks up, the typical family's monthly income will slowly accelerate, but the monthly mortgage cost is quickly jumping, much faster than income could possibly move.

The market has some adjustment to do, but it will be more of a slow leak than a pop.

The market is kind of like a four-year old kid in a toy store,

The market is getting lulled into sleep here. In reality we think that both the inflation numbers and the growth numbers will keep the pressure on the Fed.