How can you just leave me standing? Alone in a world that's so cold (So cold)
Maybe I'm just too demanding
Maybe I'm just like my father too bold
Maybe you're just like my mother
She's never satisfied (She's never satisfied)
Why do we scream at each other?
This is what it sounds like
When Doves Cry
—Prince

Well did the market come to a bump in the road or the end of the road yesterday? It wasn't a dramatic selloff, except it was a selloff, and it happened at the exact time the market had been rallying. There was a reason for the abrupt stumble into the closing bell. San Francisco Fed President John Williams mentioned the possibility of less bond buying as the economy improves. According to his own models, the economy is picking up the pace, and that means the $85.0 billion a month crutch can be tapered off and maybe ditched by year's end.

This would be big news from any Fed official, but Mr. Williams is a die-in-the-wool dove, and he's beginning to see the light. Well, not see the light per se just thinks the economy is on the cusp of walking like a natural man. I'm not convinced about the strength of the economy, things are gradually getting better, but the things that make the Fed print in the first place are abundant. Be that as it may, one day the Fed has to stop this wild experiment that challenges everything from common sense to laws of math. It would be great if they pulled the plug on the presses in an obviously strong economy.

It would have better if the Fed never printed at all, but it's a moot point.

What is interesting for the second time in as many days is we saw investors bolt for the exits fast. The first time was the initial reaction to earnings from Deere that saw its share collapse $10.00. There is a serious undercurrent of anxiety, a pullback would relieve a lot of that even if it means doves stop crying.

Message of Hard Asset Markets

Very rich people get ready for inflation different than you and I- they don't buy guns and bomb shelters.

While debate rages over how much impact Ben Bernanke has had in the stock market rally, there is no doubt Fed money printing is the main driver for an unprecedented rally in art. On Wednesday, Christie's established numerous records with an auction of contemporary art.

The total haul (with commission) was a staggering $495.0 million paced by an array of new milestones:

> Nine works $10M plus

> 23 works $5M plus

> 16 new artist records

Gold Buyers

Much has been made of the dramatic decline in the price of gold, but there's another phenomenon happening. People around the world are scooping up physical gold. While it's true jewelry demand has additional drivers in places like India and China, but demand popped in the United States as well in the first quarter.

People, central banks and technology still seeking the shining metal and history hedge against inflation.

Notes:

> First increase in jewelry for US since 2005

> Chinese jewelry demand of 185 metric tons a new record

> Middle East jewelry demand +15%

In addition to consumer demand for physical gold, Central Banks acquired 109 metric tons during the quarter marking it the seventh consecutive quarter above 100 metric tons. The big sellers were ETFs which saw net outflows of 177 metric tons. Technology sector demand surpassed 100 metric tons for the quarter as well.

It's obvious the anticipated great rotation into equities from bonds has already begun in the gold market. But the unreported story is that of physical demand, which has several narratives. Taken in conjunction with blazing prices in the art world, it's clear many individuals still see physical hard assets as the best way to hedge against an impending explosion in the rate of inflation. It hasn't happened yet, and it probably becomes the worst-case scenario long after most predictions.

For these purchasers, it doesn't matter when it happens. In fact if they were worried about timing, ETF demand for gold would be much higher as it's more liquid than gold bars. While he's the hot artist of the moment, you just don't wake up with the notion of dumping a Basquiat for $50.0 million that same day.

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