One of the distinctive features of the places we stay at Chairman’s conferences is that there’s invariably a focus on service. We just had a talk from the general manager of the Wynn property here that was probably one of the best I’ve ever heard on running a service business. Once again, I’m very grateful to be here for this wonderful experience.

I should probably comment on yesterday’s drop in the market, but I don’t really have much to say other than that volatility is normal, and after the recent run-up, some degree of decline is normal and expected.

One of the major topics of discussion about the stock market is whether we are in, or at least at the start of, a bubble. “Yes, look at the valuations!” cry some. “No, look at the valuations!” cry others. How could we tell?

The first thing we need is a definition of a bubble. The classic one is for values to increase well beyond what the fundamentals justify, but this runs into a problem with the terms “fundamentals” and “justify.” Wall Street (or any business, really) has a nasty habit of asserting, like Dr. Pangloss, that we live in the best of all possible worlds, and of inventing reasons why current prices, whatever they may be, are actually reasonable, if not cheap. So let’s sidestep that discussion.

Everyone loves a birthday. Jackson’s fifth birthday party last spring was at a candlepin bowling alley and pizza shop, and a wonderful time was had by all. This has nothing to do with the fact that we just reached the fifth anniversary of the start of the current bull market, but I like to remember it. Jackson, hopefully, will have an equally fun sixth birthday party (although Minecraft now seems to have replaced the Ninja Turtles), and the question is whether the current bull market will also make it to six.

At this point, there is no reason to believe that it won’t. The market trend continues strongly up, market expectations are strong, and retail investors are moving into the stock market. Recent pullbacks have ended quickly, with the market bouncing back to new highs.

We live in an instant-gratification society, especially if you are five years old. “But I need it now!” is a phrase I’m becoming increasingly familiar with as Jackson becomes ever more able to express himself. The substitution of “need” for “want” is a wrinkle that initially surprised me, but clearly it comes from parental questions about whether he really “needs” that new toy. The adventure continues.

I was thinking of this, now versus later and need versus want, in light of the recent employment data. I wrote yesterday about ”snowdown” versus slowdown, and today’s stats emphasize my points. Employment gains were up, despite a snowstorm in early February, and this time, the establishment survey did better than the household, narrowing that gap. The unemployment rate rose slightly because more people were looking for work, which is a good thing. The slowdown fears arose from an excessive focus on short-term data.

This has been a terrible winter—long and brutal, with lots of snow and gray days. I don’t do winter well, but I normally don’t break until around February, which means I only have to tough it out for a little longer. This year, I broke in December. It’s been a long January and February, and it looks like it may be a long March as well.

This is not to announce that I’m moving to Florida (although the subject has come up at home), but to provide some context for the slowdown we’ve seen in many of the economic statistics. Employment has been the worst hit, but retail sales, housing, and durable goods sales (cars) have also shown some damage. The question has been, as we looked at the data, whether this is an actual slowdown in the recovery, and potentially the prelude to a recession, or just a short-term dip caused by the weather.

Over the past couple of days, we’ve seen the market pop (on Friday), drop (on Monday), and pop again (yesterday). Admittedly, there was some news there—the Russian invasion of the Crimea over the weekend—but still, pop/drop/pop seems a bit strange.

I was talking with a reporter the other day who asked me a very reasonable question: “Is there a rational reason for all this activity?” He clearly didn’t think so, and while I certainly saw his point, I took the side of a rational market: given the Russian invasion, it clearly made sense to take risk off the table, and then (in theory) to move back in when it seemed the invasion was over. In the short term, you can make a reasonable case that the market response was rational.

The Ukraine crisis appears to be stalled for now, with Putin—having made his point and essentially occupied the Crimea—deciding to hold there, while the Europeans determine how to proceed. This is probably where we will be for some time, and the markets seem to concur, as they have bounced right back. Move along, nothing to see here.

I don’t necessarily think this story is over, but for the moment, let’s return to a longer-term issue that I discussed on Friday, the U.S. budget deficit. The Congressional Budget Office’s projections are below.

I was meeting with our asset management group this morning, and one of the topics of discussion was a strategy that hedges against inflation using swaps instead of TIPs. This is a fairly esoteric topic, certainly more so than I normally cover here, but it got me thinking about where inflation might be going and why. Is now the time to start thinking about this risk?

What is most interesting in the news is usually the dog that’s not barking. Economics and finance are pretty much absent from the headlines today. Instead, front-page articles in the major newspapers cover childhood obesity, NSA phone surveillance, the Ukraine, and seed-company data harvesting.

This is a shame, but pretty typical. Usually, the best place to look for what will be important in the future is deeper in the paper. Tomorrow’s front-page stories come from further back, and today they’re focused on taxes.

Check out Brad’s February 7 interview on Bloomberg Radio’s Taking Stock with hosts Pimm Fox and Carol Massar.

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