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Huh, yesterday's stocks wound up flat to slightly down in lower volume and today's futures are beginning about the same way they did yesterday. What's different is that this morning other futures are a lot more up beat (especially metals) leaving stock indexes behind. Seems like our question is whether indexes are stabilizing/consolidating for a runup or are we looking at the rally's last gasps.

Headlines:

World stocks, oil steady but eyes still on Ukraine, China
UPDATE 2-China suggests full interest rate liberalisation in 2 yrs
A Comprehensive Review of the Stock Market - Todd Harrison, Minyanville
Five Years Later, It's Joy Versus Worry - Caroline Valetkevitch, Reuters
Bull Market Rivals 1990s at Half the Valuation - Lu Wang, Bloomberg
China's Credit Reckoning Draws Closer - Craig Stephen, MarketWatch

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20 Facts About The Great U.S. Retail Apocalypse That Will Blow Your Mind
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European countries to America: Give us your gas
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MS report late yesterday: The Economy's Slow Growth Is Now Permanent (send me a PM if you want the whole presentation)

A new report from Morgan Stanley argues that potential growth for the economy is now just around 2%.

The report argues that drops in productivity and Labor Force Participation mean a new, slower growth track than what we're used to.

This has significance for monetary policy, as there may not be as much "slack" in the economy as the Fed believes.

Sorry. We're not going back to the old normal. At least that's according to Morgan Stanley.

In a new note, economist Vincent Reinhart estimates that the economy's potential growth rate is now around 2% (down from 2.5%) and that 6% is probably what represents "full employment." The Fed will have to acknowledge there's less "slack" in the system than they thought.

This chart shows the new impaired trend.

So what's behind the new slow potential growth rate for the U.S. economy?

Reinhart identifies two big trends. One is declining Labor Force Participation Rate, a trend which started well before the recent slump. And the other is declining productivity. Fewer laborers and less productivity make it hard to keep up the same growth pace.

These two charts tell the story of declining Labor Force Participation and declining productivity.

Labor Force Participation

Output per hour

Again, the big ramifications here are probably for the Fed, which may get unwanted levels of inflation faster than they want or expect.

Bigger picture is that this is something that a lot of folks are talking about right now: The end of extensive slack in the economy.

Just as an example, this is a chart from a new chartbook from Deutsche Bank's Torsten Slok, who spends a lot of time look at wage inflation trends.

Deutsche Bank

Read more: http://www.businessinsider.com/morgan-stanley-economys-growth-potential-is-now-2-percent-2014-3#ixzz2veXV8vwC