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Good morning, AdLand. Here's what you need to know today:
Vocativ made a fun 4-minute documentary about "Wall Dogs," the men and women who chain themselves to tall buildings in New York City via harness in order to paint them with advertisements.

In its first quarter earnings Google <a href="http://www.businessinsider.com/google-earnings-q1-2014-2014-4">reported revenue of $15.4 billion</a> and earnings per share of $6.27, missing estimates on both its top and bottom lines. The company's cost-per-click was down 9% this past quarter.
Adweek looks at the success actors Patrick Stewart and Ian McKellen had <a href="http://www.adweek.com/news/technology/amazing-data-ian-mckellen-and-patrick-stewarts-run-social-hijinks-157062">building excitement for their Broadway performances</a> of No Man's Land and Waiting For Godot via social media. The pair posted images of themselves palling around and generated more than 600 million impressions across Facebook, Instagram, and Twitter.
Home automation company Vivint <a href="http://www.adweek.com/news/advertising-branding/vivint-taps-deutsch-la-157070">has awarded its creative and strategic duties</a> to Deutsch L.A.
The Marketing Store hired former MRM executive planning director Ben Felton <a href="http://www.mediabistro.com/agencyspy/the-marketing-store-hires-ben-felton-as-cso_b64195">to be its new chief strategic officer</a>.
Engagement <keyword id="35666" type="COMPANY" weightage="100" keywordseo="advertising">advertising</keyword> company true[X] announced it has added three new board members: former Microsoft CMO Mich Matthews, 21st Century Fox Co-COO James Murdoch, and former AOL chairman and current venture capitalist Jonathan Miller.
Ad Age looks at Budweiser's decision <a href="http://adage.com/article/cmo-strategy/bud-jay-z-s-made-america-california/292676/">to expand the annual Made in America music festival</a>, held annually in Philadelphia, to include a second venue in Los Angeles. The brand faces a challenge in the California market from Mexican beers like Corona and Modelo, both of which are imported to the U.S. by rival Constellation Brands.
Reckitt Benckiser has put the creative account for its Mucinex brand <a href="http://adage.com/article/agency-news/reckitt-benckiser-puts-mucinex-review/292674/">up for review</a>.
Previously on Business Insider Advertising:
<ul>
<li><a href="http://www.businessinsider.com/hondas-new-anti-texting-and-driving-psa-2014-4">Honda's New Anti-Texting And Driving PSA Will Break Your Heart</a></li>
<li><a href="http://www.businessinsider.com/netflix-eating-cable-subscriptions--experian-2014-4">Proof That Netflix Is Destroying Cable TV</a></li>
<li><a href="http://www.businessinsider.com/google-opens-post-ads-to-all-advertisers-2014-4">Google Attacks Facebook By Expanding Social Ads To All Advertisers</a></li>
<li><a href="http://www.businessinsider.com/j-crew-brings-back-swimsuit-2014-4">J. Crew Took Out A Full-Page Ad To Respond To One Customer's Open Letter</a></li>
<li><a href="http://www.businessinsider.com/starbucks-ad-attacks-dunkin-donuts-2014-4">Starbucks Attacks Dunkin' Donuts With Ad Featuring Men Named Duncan</a></li>
<li><a href="http://www.businessinsider.com/heres-why-marketers-shouldnt-wait-to-join-the-latest-social-networks-2014-4">Marketers Shouldn't Wait To Join The Latest Social Networks - The Benefits Accrue To Those Who Get There First</a></li>
<li><a href="http://www.businessinsider.com/tea-co-makes-drunk-driving-look-cute-2014-4">Italian Tea Company Tries To Make Drinking And Driving Seem Cute</a></li>
</ul>

How They Paint Those Giant Ads On New York's Biggest Buildings [THE BRIEF]

<div class="KonaFilter image-container display-table float_right"><div><div class="image">REUTERS/POOL/Ben GurrBritain's Queen Elizabeth meets construction workers as she attends the official opening of the refurbished Reading Station, west of London, July 17, 2014. </div></div></div>Stocks rallied, erasing most of their losses from yesterday's sell-off, as all the major stock indices finished the week higher.
First, the scoreboard:
<ul>
<li>Dow: 17,086.90, +110, (+0.6%)</li>
<li>S&amp;P 500: 1,976.95, +18.9, (+0.9%)</li>
<li>Nasdaq: 4,429.12, +65.8, (+1.5%)</li>
</ul>
And now, the top stories of the day:
1) The day's lone economic data point for the session was the <a href="http://www.businessinsider.com/u-michigan-consumer-sentiment-july-2014-2014-7">University of Michigan's</a> preliminary consumer sentiment survey, which came in a bit below expectations. The reading for July slipped to 81.3 from 82.5 in June, also below expectations for 83.0. Following the report, Ian Shepherdson at Pantheon Macro said the dip was likely due to gas prices. "The dip is due entirely to a 2.4-point decline in the expectations component, which we think is due to the temporary spike in gasoline prices triggered by the chaos in Iraq. We expect a rebound in August," wrote Shepherdson. 
2) In mergers &amp; acquisitions news, <a href="http://www.businessinsider.com/pharmaceutical-tax-inversion-deals-2014-7">AbbVie agreed to acquire Shire</a> in a deal worth $53 billion that will allow the company to move its tax base to Jersey, an island in the English Channel. The deal is the latest in a series of deals in the pharmaceutical space that have been so-called "tax inversion" deals in which the acquiring company moves its tax base to enjoy lower a corporate tax rate. 
3) Noted hedge fund manager Dan Loeb published his latest quarterly letter to clients, revealing both a <a href="http://www.businessinsider.com/third-point-buys-royal-dsm-2014-7">new stake in a Dutch nutrition</a> company and his <a href="http://www.businessinsider.com/loeb-doesnt-see-fed-rate-hike-soon-2014-7">thoughts on Fed policy</a>. Loeb said his Third Point fund recently initiated a position in Royal DSM, which last year had about $12 billion sales. In regards to Fed policy, Loeb said that waiting for the Fed to hike rates is like "Waiting for Godot," Samuel Beckett's play in which two friends wait for a friend to arrive that never does. 
4) Forbes Media, the publisher of Forbes magazine, <a href="http://www.businessinsider.com/forbes-media-sells-majority-stake-2014-7">agreed to sell a majority stake</a> in the company to a group of international investors, with the investment valuing the company at about $475 million. 
5) Sotheby's, the auction house in which Dan Loeb has previously been involved, <a href="http://www.businessinsider.com/sothebys-to-cut-jobs-in-us-and-uk-2014-7">announced that it will</a> reduce headcount in both the U.S. and U.K. as part of a restructuring plan. The plan will result in the company taking a $13 million charge in the third quarter, with the company expecting to fully implement the reductions by the end of 2014. 
Don't Miss: <a href="http://www.businessinsider.com/bacon-prices-inflation-2014-7">Bacon Prices Are Surging »</a>

NASDAQ SURGES, DOW ADDS 120: Here's What You Need To Know

SigFig raised $120 million on the promise of reinventing investing, but hasn't announced a big partnership in years. Here's how it went from deals with UBS and Wells Fargo to struggling to compete.

<div class="KonaFilter image-container display-table"><div><div class="image"></div></div></div> Yesterday, I mentioned again that <a href="http://www.businessinsider.com/stocks-are-expensive-2014-11">I am increasingly concerned about the level of stock prices</a>. <a href="http://www.businessinsider.com/stock-market-crash-2013-9"> </a>
Specifically, I said that, even if stock prices continue to go higher from here, which they might, I think that they'll eventually crash back down below today's levels - possibly far below. Even if stocks don't eventually crash, but just move sideways, I think returns will be lousy for the next 7 years.
In light of that view, several readers have asked why I am not selling my stocks or even going short (betting on a crash).
After all, if I think that stocks might tank from here, wouldn't this be a wonderful opportunity to make or save some money?
That's a perfectly reasonable question. 
Here's why I'm not selling my stocks or going short the stock market:
* My portfolio is well diversified. My savings are composed primarily of low-cost index funds holding stocks, bonds, cash, and real-estate. If the stock market collapsed, this diversification would cushion the blow. It would also (I hope) keep me from panicking and selling near the bottom. (This is a real risk, one I occasionally succumbed to early in my investing life.) I also have enough of my portfolio in cash that, if the market does crash, I'll be able to rebalance into stocks at a much lower level.
* I don't invest money in the stock market that I think I will need to use in the next 10 years. The stock market does crash occasionally. And the last thing you want is to have to sell your stocks during the period when the market is "crashed." If the stock market crashes permanently, or we get in a Japan-type situation in which stocks remain clobbered for decades, then, yes, I'll be bummed I didn't sell some now. But otherwise I expect any crash to be relatively temporary, just as the crash of 2008-2009 was.
* There's nothing else to buy: The outlook for other asset classes over the next 10 years is no more attractive than it is for stocks (and, in some scenarios, it is worse). If interest ever rates rise back to normal levels, bonds will get obliterated. Cash is earning nothing. Real-estate is also expensive by many measures. So selling stocks and moving to, say, bonds, might be just leaping from the pot into the fire.
* There is a reasonable likelihood that inflation will accelerate at some point over the next decade, and stocks are actually a good hedge against inflation. Unlike bonds and cash, stocks are "real" assets. They represent an ownership share in an enterprise whose business will adjust to inflation by raising the nominal level of prices, wages, and profits. Stocks don't necessarily do well in high-inflation environments (stocks were flat in nominal terms from 1966-1982 and dropped considerably after adjusting for inflation). But they do better than bonds, which get demolished.
* I have learned the hard way that market timing is very difficult. It is really hard to correctly time major market reversals. (I learned this as an analyst during the dotcom crash in 2000, and my mistake cost me and my clients a fortune.) And it is really, really hard to correctly time two major market reversals in a row, which is what I would have to do for it to be a smart idea for me to dump my stocks now. Specifically, if I sell now, and the stock market does, in fact, crash, I will then have to figure out the right moment to get back in. (Given inflation, remaining on the sidelines forever would be a disaster.) If the market drops, say, 25%, it will be because things look so terrible that it will look like the market is going to drop another 25%. And who wants to buy only to have the market crash another 25%? If I set a hard "buy" floor at 30%, meanwhile, the market will probably drop 28.8% and then skyrocket, leaving me alone at the station as it rolls away.
* Even if I am right about lousy future returns, the market might just move sideways. Instead of crashing over the next year or two, the market might rise another 10%-30%-50%-100% and then correct the "imbalance" by parking in place for 10-20 years. It will be psychologically difficult for me to buy back in at a higher level after selling here, especially if I am still worried about a crash. (And if I wait to buy in until I am NOT worried about a crash, I'll be waiting for Godot.)
* If I sell now, I'll have to pay taxes. Thanks to my indexing strategy, I have captured every point of the move up from the 2009 market low. When markets crash, I also buy more of them, so I was lucky enough to get some new stock in 2008 and 2009 at much lower levels than today. So if I sell now, I'll have some capital gains taxes to pay. For taxable investors, unlike fund managers who get judged on pre-tax returns, taxes are a real and important issue. The market would have to drop at least 20% from where a taxable investor sold - and the taxable investor would then have to get back in at that level and ride the market back up - for the investor to save money selling at the top.
* Oddly, the best thing that could happen for my long-term stock returns would be for the market to crash 50% and then stay crashed for 5-7 years before going up again. I reinvest dividends. So if the market drops by, say, 50% over the next year, and then stays at, say, DOW 7,500 for 5-7 years, the stocks I own will reinvest 5-7 years worth of dividends at half the price per share than I am paying today. This will result in my accumulating twice as many new shares over the next 5-7 years as I will if stocks stay where they currently are. Then, 5-7 years from now, when the stock market finally begins to recover, these new shares will act as a sort of portfolio turbocharger, boosting my returns. 
* Lastly, importantly, just because I firmly believe that long-term stock returns will be lousy doesn't mean that I know they will. I am never certain about any future market behavior. And neither, by the way, is anyone else. I would respectfully suggest that anyone who is even highly confident about future market behavior either doesn't have much market experience or is deluding themselves. I am reasonably confident that stock returns will be crappy for the next decade - because all the valid valuation measures I know of suggest that they will. But sometimes things change fundamentally and the old rules no longer apply. And it's certainly possible that it's "different this time." 
In short, the only thing I am really worried about as a stock-market investor is a permanent crash. And if the stock market crashes permanently, it will likely be because the United States has experienced a communist revolution in which all private assets are seized or some other cataclysm. And if that happens, I'm going to have bigger things to worry about than stock prices.
SEE ALSO: <a href="http://www.businessinsider.com/stocks-are-expensive-2014-11">Stocks Are Now So Fantastically Expensive That Long-Term Returns Will Likely Be Negative</a>

Here's Why I'm Not Selling My Stocks Even Though I Think Returns Will Be Lousy

<div class="KonaFilter image-container click-to-enlarge"><div class="image on-image"><a title_source="Popperfoto /Getty Images" title_caption="I don't own a car like this (unfortunately). I also don't don't own stocks on margin." class="zoomin" href="http://static2.businessinsider.com/image/5245cf4d69bedd2d708f0407-960/stock-market-crash-1929-2.jpg"></a>Popperfoto /Getty ImagesI don't own a car like this (unfortunately). I also don't don't own <keyword id="6354298" type="ORGANIZATION" weightage="60" keywordseo="stocks">stocks</keyword> on margin.</div></div>Yesterday, I mentioned that <a href="http://www.businessinsider.com/stock-market-crash-2013-9">I think the stock market might crash</a>.
I'm not predicting a crash - I just think the odds of this happening in the next couple of years are higher than usual (<a href="http://www.businessinsider.com/stock-market-crash-2013-9">logic here</a>).
More importantly, I think the odds are very high that, even if the market doesn't crash, stocks will return far less over the next decade than the double-digit percentages they have returned in the past four years.
In light of that view, several readers have asked why I am not selling my stocks or even going short the stock market to profit from a crash.
After all, if I think there's a "decent chance" of a 30%+ crash in the next year or two, wouldn't this be a wonderful opportunity to make (or at least save) some money?
That's a perfectly reasonable question.
Here's why I'm not selling my stocks or going short the stock market:
* My portfolio is already well diversified. My savings are composed primarily of low-cost index funds holding stocks, bonds, cash, and real-estate. If the stock market collapsed, this diversification would cushion the blow. It would also (I hope) keep me from panicking and selling near the bottom. (This is a real risk, one I occasionally succumbed to early my <keyword id="35175" type="UNKNOWN" weightage="60" keywordseo="investing">investing</keyword> career.) I also have enough of my portfolio in cash that, if the market does crash, I'll be able to rebalance into stocks at a much lower level.
* I never invest money in the stock market that I need to use in the next 10 years. The stock market does crash occasionally. And the last thing you want is to have to sell your stocks during the period when the market is "crashed." If the stock market crashes permanently, or we get in a Japan-type situation in which stocks remain clobbered for decades, then, yes, I'll be bummed I didn't sell some now. But otherwise I expect any crash to be relatively temporary, just as the crash of 2008-2009 was.
* The outlook for other asset classes over the next 10 years is no more attractive than it is for stocks (and, in some possible scenarios, it is worse). If interest rates rise back to normal levels, bonds will get obliterated. Cash is earning nothing. Real-estate is also expensive by many measures. So the last thing I want to do is leap from the pot into the fire.
* There seems a reasonable likelihood that inflation will accelerate at some point over the next decade, and stocks are a good hedge against inflation. Unlike bonds and cash, stocks are "real" assets. They represent an ownership share in an enterprise whose business will adjust to inflation by raising the nominal level of prices, wages, and profits. Stocks don't necessarily do well in high-inflation environments (stocks were flat in nominal terms from 1966-1982 and dropped considerably after adjusting for inflation). But they do better than bonds, which get demolished.
* Just because I think there's a "decent chance" of a market crash doesn't mean I am highly confident there will be one. I am never highly confident of any short-term market behavior. And I would suggest that anyone who is highly confident about short-term market behavior either doesn't have much market experience or is deluding themselves. I am reasonably confident that stock returns will be crappy for the next decade - because all the valid valuation measures I know of suggest that they will. But sometimes things change fundamentally and the old rules no longer apply. And it's certainly possible that it's "different this time." (That, by the way, is why I'm not 100% confident that returns will be crappy. If you ever meet someone who knows what the market is going to do, please send them my way. I always assumed this person existed, and I spent my decade on Wall Street looking for him/her, but I never found him/her.)
* I have learned the hard way that market timing is very difficult and is generally a terrible idea. It is really hard to correctly "time" major market reversals. (I learned this as an analyst during the dotcom crash in 2000, and my mistake cost me and my clients a fortune.) And it is really, really hard to correctly time two major market reversals in a row, which is what I would have to do for it to be a smart idea for me to dump my stocks now. Specifically, if I sell now, and the stock market does, in fact, drop 30%+ from this level in the next couple of years, I will then have to figure out the right moment to get back in. (Given inflation, remaining on the sidelines forever would be a disaster.) If the market drops, say, 25%, it will be because things look so terrible that it will look like the market is going to drop another 25%. And who wants to buy only to have the market crash another 25%? If I set a hard "buy" floor at 30%, meanwhile, the market will no doubt drop 28.8% and then skyrocket, leaving me alone at the station as it rolls away.
* The market might not crash. Instead of crashing over the next year or two, the market might rise another 10%-30%-50%-100% and then correct the "imbalance" by parking in place for 10-20 years. It will be psychologically very difficult for me to buy back in at a higher level after selling here, especially if I am still worried about a crash. (And if I wait to buy in until I am NOT worried about a crash, I'll be waiting for Godot.)
* If I sell now, I'll have to pay taxes. Thanks to my indexing strategy, I have captured every point of the move up from the 2009 market low. When markets crash, I also buy more of them, so I was lucky enough to get some new stock in 2008 and 2009 at much lower levels than today. So if I sell now, I'll have some capital gains taxes to pay. (I did, stupidly, "rebalance" out of some stocks in 2011 or so, in part because I persuaded myself that we were experiencing a sort of sucker's rally. That dumb-ass move has cost me a lot of money between now and then and reaffirmed by conviction that market timing is idiotic. But, on the bright side, I have fewer embedded capital gains taxes to pay.)
* The best thing that could happen for my long-term stock returns would be for the market to crash 50% and then stay crashed for 5-7 years. I reinvest dividends. So if the market drops by, say, 50% over the next year, and then stays at, say, DOW 7,500 for 5-7 years, I will get to reinvest 5-7 years worth of dividends at half the price per share that I am paying today. This will result in my accumulating twice as many new shares over the next 5-7 years as I will if stocks stay where they currently are. Then, 5-7 years from now, when the stock market finally begins to recover, these new shares will act as a sort of portfolio turbocharger, boosting my returns. 
In short, the only thing I am really worried about as a stock-market investor is a permanent crash. And if the stock market crashes permanently, it will likely be because the United States has experienced a communist revolution in which all private assets are seized or some other cataclysm. And if that happens, I'm going to have bigger things to worry about than my stock portfolio...
SEE ALSO: <a href="http://www.businessinsider.com/stock-market-crash-2013-9">I Think There's A Decent Chance The Stock Market Will Crash</a>

Here's Why I'm Not Selling My Stocks Even Though I Think The Market Might Crash

The unemployment rate has fallen sharply from its recessionary peak, however, a large portion of this reflects a decline in the participation rate. In fact, many pundits (including several Fed officials) are completely dismissing the drop in the traditional U3 unemployment rate as a true barometer of labour market tightness (I think that is a mistake, by the way). 
 
The participation rate has fallen from pre-recession levels of 65% to 63% in February as record numbers of Americans have left the workforce - it hasn't been this low since the late 1970s. The rise in the number of people leaving the labour force entirely is running about double the pace of new job creation. Over 90 million Americans now reside outside the traditional borders of the labour market. Five years ago, the number was closer to 80 million. This indeed is a mystery and a huge socio-economic phenomenon. 
 
Interestingly, of the folks who have decided to leave the workforce - by definition are not looking for work actively - and do not want a job are down more than 10% from year-ago levels. Moreover, those who don't want a job at all have seen a visible uptrend. It would be interesting to see how they are getting by (Uncle Jack's generosity? The underground/barter economy? The lottery?).
 
While many point to the impact of discouraged workers on the falloff in the participation rate, this is not the only story currently playing out. The number of people who left the labour force and claim they did so without being discouraged is running far above historical norms. One example are people who have headed to school - accounting for 7% of the overall decrease in labour force participation over the past three years (assuming they intend on graduating with a degree, it will be sometime before they resurface into the classic job search - in other words, waiting for the participation rate to rise again and thwart the decline in the unemployment rate will be akin to waiting for Godot). 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
The social safety net is supporting a record number of Americans. In fact, the Cato Institute published a controversial study last summer, concluding that in 39 states, those individuals astute enough to tap the myriad of government benefit programs at all levels got paid at least as much as an administrative assistant (in 11 states, as much as a school teacher)! Now not everyone is lazy, but at the margin, when governments create disincentives to work, some will choose not to. From 2010 to 2013, the data show that individuals leaving the labour force due to disability accounted for an unprecedented 28% of the overall tally - this compares to 18% who were classified as "disabled" from 2007 to 2010. 

 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
The key 25-34 age demographic is seeing a change in priorities, with a noticeable upward trend in those not in the labour force due to family responsibilities - like taking time off and tending to our aging parents. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Speaking of which, the first of the Baby Boom generation (those born between 1946 and 1964) turned 65 years old three years ago. The retirement wave is just starting. This is the primary reason for the secular decline in the participation rate. Indeed, from 2010 to 2013, more than 60% of labour force dropouts were retirees - more than double the share for the prior three years. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
This is not a chart of a dot-com stock circa 1999. This is the annual increase in the number of Americans turning 65 - this number is going to be at least 1.5 million per year for at least the next fifteen years. We are seeing record high numbers of people falling into the 65 and over age bracket, resulting in a significant shift in U.S. demographics and thus the labour market. 

 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
There is some discouraged worker effect on the participation rate to be sure, but while the level is above pre-crisis norms, it is on a discernible downward trend of late. This is but a small part of the story despite all the attention it gets. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Janet Yellen mentioned in a recent speech that the involuntary part-time share of the employment pie is a good proxy for the 'discouraged worker' effect so all of a sudden, this arcane metric has jumped to the top of the list of what economists now pay attention to. Yes, it is high by historical standards but is far off the peak at 5% presently, and in past episodes when this measure was this high, the headline unemployment rate was well north of 7% as opposed to today's 6.7%. Again, nobody is saying that there is no discouraged worker effect at all - but that it is a two-bit player in this game.
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
The longer people remain out of work, the greater the erosion in their skills sets which can make finding a new job even tougher. To be sure, the share of the ranks of the unemployed who have been looking for work fruitlessly for at least six months at 37%, while off the highs, is still uncomfortably high - in past recessions, this metric rarely got much above 22%, and today, almost five years into the recovery, it is 15 percentage points above those prior cycle peaks. The problem is that over time, the idleness of these workers renders then increasingly unemployable - I think it is a false premise that these people, as they fall out of the labour force in the future (as some of their predecessors already have - only 10% of the long-term unemployed actually end up getting a job) will somehow come back into the labour force when things get better (as an aside, things aren't great but they have been getting better for five years now; what exactly needs to happen to lure these folks back into a job search in the future, especially if they have found a way to get by either by doubling up, tapping the benefits system or working in the underground economy?). 

 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Job openings have rebounded nicely from recessionary lows as firms look to add to payrolls. If all four million openings were filled, the jobless rate would plunge to 4% (do you believe in miracles? Fairy tales?). But this goes to show that contrary to popular opinion, business demand for labour is on a rising path. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
The problem, especially for small companies, is filling these positions. Then again, when Uncle Sam pays you to stay at home and watch Breaking Bad re-runs ... 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Firms are reporting difficulty in finding qualified applicants for the job openings they have available. The latest Fed Beige Book highlighted labour shortages in health care, technology, transportation services, engineering and construction. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Accordingly, quality of labour is increasingly becoming a problem for firms - small businesses citing this as their top concern at a level we have not seen in nearly six years. 

 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Perhaps part of the problem is that the U.S. education system is churning out graduates that are not really in great demand by the private business sector - we didn't read much about the demand for social scientists and psychologists in the Beige Book. We've reached a state where more people are graduating with expertise in homeland security than in either computer science or math. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Demand for labour is going up to cycle highs while the available pool of labour has shrunk to cycle lows. The case for immigration reform has rarely been stronger from an economic perspective. According to an op- ed piece in the March 26th WSJ (How America Loses a Job Every 43 Seconds), the H-1B visa program is still being capped at 85,000 annually - but the applications far outnumber that ceiling. It is estimated that we are seeing 500,000 of those four million job openings not being filled just by overly restrictive immigration policy alone. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
One measure of labour market tightness is the unemployment rate for those folks who had been out of work for six months or less - this metric at 4.2% is already a full percentage point below the average so far this cycle - and the number or short-term joblessness is back down to 2004 levels (even as long-term unemployment is more than double). 

 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
The wonderful thing about economics is that in first-year university, you learn how to draw supply and demand curves - important because at the point the two lines intersect generates the equilibrium price. In this particular case, it is about the price of labour. There is still not yet a boom of any sorts, but the wage trend has clearly improved. 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
Firms are preparing to increase compensation in order to retain and acquire qualified workers - again, the laws of supply and demand at work. I am not sure why there are so many economists out there predicting a continued absence of wage inflation - I mean, economists may be the forecasters, but it is the businesses who are the ones who actually set the wage pattern. If they are saying they are now willing to pony up more in light of a dwindling pool of labour, why would anyone assume that they are not going to (unless they are band of liars)? 
<div class="KonaFilter image-container"><div class="image">David Rosenberg</div></div> 
It's not just the business sector that see the arithmetic of tighter labour markets precipitating higher wages ahead, but a growing number of workers are expecting a fatter paycheck in coming quarters as well. 
Maybe it is a hope. Maybe just a prayer. I call this above chart the Marx- Engels slide - if I am right, that the returns to work will rise in lagged response to the sustained tightening in the labour market, then we will finally start to see the wage share of Gross Domestic Income begin to carve out a bottom and finally embark on the mean-reversion process. I realize what this means for profit margins, but in the name of ensuring that capitalism is sustained, my friends, we need to start seeing this chart reverse course.

ROSENBERG: These 21 Charts Will Convince You That The Labor Market Is Tighter Than You Think

<div class="image-container"><div class="image">derekskey via <a href="http://www.flickr.com/photos/derekskey/9159256442/in/photostream/">www.flickr.com</a> creative commons</div></div>
ONE of the most perplexing questions of the early 21st century is this: how can the French, who invented joie de vivre, the three-tier cheese trolley and Dior's jaunty New Look, be so resolutely miserable? To outsiders, the world's favourite tourist destination embodies the triumph of pleasure over desk-slavery, slow food over fast, the life of the flâneur over that of the frenetic. Yet polls suggest that the French are more depressed than Ugandans or Uzbekistanis, and more pessimistic about their country's future than Albanians or Iraqis. A global barometer of hope and <keyword id="6358439" type="UNKNOWN" weightage="60" keywordseo="happiness">happiness</keyword> puts the French second to bottom of a 54-country world ranking, behind austerity-battered Italians, Greeks and Spaniards, and ahead only of Portugal.
Happiness is of course a slippery concept. Asked if they are happy, people everywhere are more than likely to say yes; far fewer say that they laugh much. Gallup, a pollster, has devised a global "positive experience index", based on whether respondents report that they laughed and smiled a lot or did something enjoyable the previous day. By such measures, <keyword id="6354785" type="COUNTRY" weightage="60" keywordseo="France">France</keyword> does better than the world average. But take out war-torn or poor countries, and measure the French against fellow rich nations, and they still turn out to be unhappier than their peers. The French report fewer "happy experiences" than those in America, Britain, Germany, Switzerland, Sweden, Canada, Norway, the Netherlands, Austria and Belgium. The land of the bon vivant is an unhappy outlier.
Claudia Senik, a French economist at the Paris School of Economics, calls this the "French unhappiness puzzle". In a 2013 study, she found that the French were not only unhappier than their level of wealth and unemployment would suggest, but also more discontented than French-speaking people in Belgium and Canada (so language is not the reason), and more miserable when they emigrated compared with non-French expatriates in the same place (so they take their gloom with them). "Unhappiness seems to be more than about life in France," Ms Senik concluded. "It is something about being French."
Naturally, Ms Senik's findings caused a stir in France, prompting Maureen Dowd, a New York Times writer who was visiting Paris at the time, to report that "joie de vivre has given way to gaze de navel". Le Monde ran three pages under the title "Liberté, Égalité, Morosité", in a bid to decode its fellow countrymen's "persistent melancholy". France, it turns out, has the highest suicide rate in western Europe after Belgium and Switzerland. An American psychiatric study showed that, among ten rich countries, the French were the most likely to have a "major depressive episode" at some point in their life. Even the French language seems to be particularly well stocked--morosité, tristesse, malheur, chagrin, malaise, ennui, mélancolie, anomie, désespoir--with negativity. Can there really be something about being French that makes for so much gloom?
<h3>Fifty shades of noir</h3>
Two periods in France's recent history have contributed most to the rich seam of misery in its culture--one after the revolution, the other after the second world war. In the quarter-century from the fall of the ancien régime in 1789 to 1814, France overthrew a monarchy, endured the Terror, and lost an empire. After this period the Romantic movement, from Baudelaire to Chopin, expressed a melancholy infused with nostalgia and ambivalence towards a society dominated by rationalist thought and bourgeois values.
In "René", a novel published in 1802, Chateaubriand introduced to the world the tortured French youth, whose "wretched, barren, and disenchanted" existence embodied what the writer called the mal du siècle. In his memoirs, Chateaubriand recognised that he had set more of a trend than he had bargained for:
<h3>If René did not exist, I would not write it again...all we hear nowadays are pitiful and disjointed phrases; the only subject is gales and storms, and unknown ills moaned out to the clouds and to the night. There's not a fop who has just left college who hasn't dreamt he was the most unfortunate of men; there's not a milksop who hasn't exhausted all life has to offer by the age of sixteen; who hasn't believed himself tormented by his own genius; who, in the abyss of his thoughts, hasn't given himself over to the "wave of passions"; who hasn't struck his pale and dishevelled brow and astonished mankind with a sorrow whose name neither he, nor it, knows.</h3>
Romantic miserabilism was experienced as a form of pleasure. "Melancholy", wrote Victor Hugo, "is the happiness of being sad." It was treated as a noble state, a higher aesthetic condition. "I do not pretend that joy cannot be allied with beauty," wrote Baudelaire in his diary. "But I do say that joy is one of its most vulgar ornaments; whereas melancholy is, as it were, its illustrious companion." Much of this tradition is firmly fixed in today's French mind. Hugo's poem "Melancholia" is required reading for French lycée students, as is Alfred de Musset's "La Nuit de Mai", whose narrator laments that "Nothing makes us so great as great sorrow."
The strange beauty of melancholy finds some echo in mid-20th-century France, which produced a second wave of miserabilism. Françoise Sagan's "Bonjour Tristesse", published in 1954, for instance, opens with the 17-year-old Cécile's lament:
<h3>A strange melancholy pervades me to which I hesitate to give the grave and beautiful name of sorrow. The idea of sorrow has always appealed to me, but now I am almost ashamed of its complete egoism. I have known boredom, regret, and occasionally remorse, but never sorrow. Today it envelops me like a silken web, enervating and soft, and sets me apart from everybody else.</h3>
Yet the ennui that marked this second period had less to do with nostalgia than nausea. In "L'Etranger", Albert Camus's protagonist, Mersault, is perhaps the world's best-known embodiment of anguish in the face of the unknowable meaning of existence, or the absurd. Post-war French theatre developed the absurd, through the plays of Camus, Jean Anouilh and the Franco-Romanian Eugène Ionescu. Samuel Beckett, an Irishman, wrote "Waiting for Godot" in French. On a chilly winter's evening in 1953 on Paris's left bank, two years before the play went on to unsettle English-speaking audiences, it was first staged at the 75-seat Théâtre de Babylone, and struck a chord with post-war Paris.
Neither Camus nor his contemporary, Jean-Paul Sartre, was ultimately a pessimist. But it is the torment of existentialism, rather than its conclusions, that captured the imagination. Indeed, the left-bank literary clique led by Sartre and Simone de Beauvoir, which gravitated to the cafés of Saint-Germain-des-Près, adopted ennui as a way of life as well as a philosophy. When Sartre handed the original manuscript of "Nausea" to Gallimard, his publisher, he entitled his novel "Melancholia".
Perhaps the best exemplar of miserabilism among contemporary French fiction writers is Michel Houellebecq, the controversial Goncourt-prize-winning novelist, in such nihilist works as "Whatever" or "Atomised". His characters invariably lead empty, often sordid, always disillusioned lives. "In the end," writes Mr Houellebecq in "The Elementary Particles", "there's just the cold, the silence and the loneliness. In the end, there's only death."
There have, of course, been periods during which the gloom lifted. It was after the double shock of the Franco-Prussian war of 1870-71 and the bloody Paris Commune, after all, that the Impressionists took their tubes of paint and brushes outdoors, delighting in light and colour. Despite a measure of fin-de-siècle anxiety, the belle époque was a moment of breezy certainty. Gustave Eiffel unveiled his wrought-iron tower in 1889. By 1900 the City of Lights drew 51m visitors to its universal exhibition, under the theme of "Paris, capital of the civilised world", and Matisse, Derain and other fauves had started to capture exuberant colour and warmth on canvas. Yet miserabilism seems to have a greater hold on the French mind today.
<h3>I doubt, therefore I am</h3>
One reason could be the French appetite for brutal self-criticism. From Descartes onwards, doubt is the first philosophical reflex. "The rationalist tradition makes us sceptical; we exist through criticism," argues Monique Canto-Sperber, a philosopher and director of Paris Sciences et Lettres, an elite university. "We treat those too full of hope as naive." In "Candide, or The Optimist", published in 1759, Voltaire mocks the folly of looking on the bright side in the face of unimaginable horrors. "Optimism", says a disabused Candide in the novel, "is the madness of insisting that all is well when we are miserable." When a French magazine recently tried to decode today's national pessimism, it concluded: "It's Voltaire's fault". "We find it more chic and more spiritual to doubt everything."
Up to a point, this is an affectation of the elite. "It is in a certain Parisian milieu that there are intellectuals who are grumpy by trade," argues Jack Lang, the Socialist former culture minister: "There is a gap with the rest of French society." Yet France cherishes public intellectuals, so their influence spreads wide. It is a talking, thinking culture. Its films value dialogue over plot; its talk-shows are interminable. The French, wrote a helpful official guide for British servicemen heading to France for the 1944 liberation offensive, "enjoy an intellectual argument more than we do. You will often think that two Frenchmen are having a violent quarrel when they are simply arguing some abstract point."
The country treats its philosophers like national treasures, even celebrities, splashing photographs of them across the pages of glossy magazines. And it ensures that the canon of French thought is fed to the whole country. All pupils taking the school-leaving baccalauréat exam must study philosophy, and teenagers are examined on such cheery essay questions as "Is man condemned to self-delusion?" or "Do we have an obligation to seek truth?". So if French intellectuals are predominantly critical pessimists, miserabilism may in part be the consequence of holding them in such esteem. Were Americans to pay more attention to the writings of Noam Chomsky and Jared Diamond, perhaps they would be gloomy too.
This critical reflex reaches right into the classroom, generating a further source of negativity. In French schools, for example, the tradition is for teachers to grade harshly, and praise with excessive moderation. Under a nationwide system that awards marks out of 20, a pupil doing a dictée has points (or even half-points) deducted for every error; so a child swiftly ends up with zero. The idea is that all children can always do better. The result is a lack of what the French, borrowing English syntax, call "la positive attitude".
Fully 75% of French pupils worry that they will get bad grades in maths tests, according to an OECD study, nudging stressed-out South Korean levels (78%). A recent government-commissioned report on a small pilot experiment in some French secondary schools, where Cartesian grading had been shelved in favour of a more encouraging system, noted with some surprise that weaker pupils were absent from school less often, more confident in the classroom, and "less stressed when faced with failure".
If the French are life's critics, they are at the same time idealists, and these two make unhappy bedfellows. Thanks to the philosophers of the Enlightenment and the 1789 revolution, the concept of progress towards an ideal society has, despite periodic turmoil and bloodshed, been a powerful narrative in the French mind. The best embodiment of this is the French declaration of human rights. Unlike the American declaration of independence in 1776, which guaranteed the rights of all Americans, the French version 13 years later guaranteed the rights of all mankind.
To this day, the ambition to inspire the world with a secular republican ideal, backed by the spread of French culture and language, stirs political leaders. "France is only itself when in pursuit of an ideal," wrote Dominique de Villepin, a former prime minister, in a deliberate echo of Charles de Gaulle's reference to the country's "exceptional destiny". It is great stuff for myth-making, as De Gaulle demonstrated so masterfully after liberation from Nazi occupation. But when reality does not quite match up to ideals, self-criticism kicks in and misery results.
Left-wing French intellectuals never quite got over the failed revolutionary promise of the May '68 student uprising, nor their disillusion at the declining influence of French thought from the 1980s onwards. Others struggled to reconcile French values with the country's darker moments, notably under occupation. Today, "belief in a better tomorrow has come to an end," says Christophe Prochasson, a French historian. "There is a crisis of progress."
Put simply, the French know that they have enjoyed a fabulous way of life, and are depressed by the thought that neither the French model, nor Europe, seems able to provide the prosperity or the national grandeur it once did. The upshot is that "we are collectively animated by a sense of doom and decline," says Dominique Moïsi, of the French Institute of International Relations. "We have in mind this great nation of ours: the major power in Europe under Louis XIV and Napoleon I, the biggest allied standing army in the first world war. Now there's a sense of 'What happened to us?'."
<h3>The pleasure of pouting</h3>
France is not alone in contemplating its diminished status. Britain had a grand past too. But the post-colonial, post-industrial British do not share the French sense of national depression, partly because they never considered their empire to be part of an effort to export a culture or a model society. And, having accidentally given the world the English language, Britain feels relaxed about its global cultural influence. The contrasting decline of French, once the language of European diplomacy, high culture and polite conversation, is felt as a national wound.
Idealistic France's painful reckoning with decline is therefore quite different to the British approach of resigned muddling-through, argues Jean-Philippe Mathy, of the University of Illinois, in "Melancholy Politics". It is almost, says Mr Prochasson, the historian, a form of bereavement. "There is a very profound pessimism today due to the realisation that France is becoming a country like any other, and this is difficult."
Does it matter? Certainly, France's high suicide rate is a serious cause for concern. Dissatisfaction also makes the French a particularly fractious people to govern, ready as they are to contest, and protest, at the slightest excuse. Confidence too is elusive in a country given to pessimism, making it harder still for politicians to persuade the French to try new ways of doing things.
Yet pessimism has not stopped France from enjoying itself. French hedonism has survived miserabilism--or perhaps provided a refuge from it. Even in the immediate aftermath of the 1789 revolution, the country exhibited a "thirst for pleasure", as one contemporary newspaper report put it: "The stream of fashion, a succession of dinners, the luxury of their splendid furniture and their mistresses, are the objects that chiefly employ the thoughts of the young men of Paris." With firework displays, extravagant fashion, circuses and carousels, Paris at the time, for the rich at least, was all about enjoyment. During les années folles, upper-class American tourists took the steamer to Normandy and then the railway to Paris, drawn to France, writes Harvey Levenstein, a historian, as "a land that was free from American puritanism, where the pursuit of pleasure reigned supreme".
Nor has miserabilism discouraged the French preoccupation with beauty and taste. France does not wear its gloom like a dreary accessory. On the contrary, its culture delights in elegance, sensuality, quality and form: the exquisite hand-stitching on the haute-couture dress; the immaculately glazed tartes aux framboises lined up in the pâtisserie window. The aesthetics of daily life, the art de vivre, remains a source of both grand gestures and small stolen pleasures. It is no coincidence that the two biggest luxury-goods groups in the world are French.
Modern French culture may not have supplied great writers to rival Hugo or Molière, and Paris may lack the buzz of New York or London. But it is hard to argue that negativity has stifled French creativity. Would France have brought the world existentialism had Sartre been a cheerful fellow?
The critical impulse has promoted cultural innovation. Both cinema's New Wave and French literary theory were born of critical reconstruction of what came before. Some of France's most creative periods have followed bleak times: the flowering of painting, literature and science after its defeat in the Franco-Prussian war, or of the avant-garde in art and fashion after the horrors of the first world war. Christian Lacroix, a French designer, points out that war and revolution in France have been times of "creative reinventions, the moment new forms of luxury come into play".
Perhaps the French need dissatisfaction and thrive on doubt. "There is a certain pleasure taken in being unhappy: it's part of an intellectualism of French culture," says Ms Senik. "Malaise and ennui are to France what can-do is to America: a badge of honour," wrote Roger Cohen in the New York Times recently. Pessimism does not preclude pleasure. All that sitting around at pavement cafés, looking fashionably discontented, can be fun. Optimism is for fools; sophisticates know better. Bleak is chic--especially when opening another bottle of Saint-Emilion and reaching for the three-tier cheese trolley.
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