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Good news is bad news, and on Friday it was very good, and very bad. The monthly payrolls report showed a superstrong labor market, with more jobs created than expected and unemployment matching a 53-year low. Stocks dropped, as did bond prices, with bond yields up. Such is the world of high inflation—and it is creating serious problems for those trying to cushion their portfolios against severe loss.

The basic pattern of markets for the past two decades has been reversed. Investors grew used to it, but it no longer works: Strong economic data meant better profits, so were good for stocks, but also meant a little more inflation, so were bad for bonds, pushing up yields. For 20 years there was a strong tendency for stocks to rise on days when bond yields rose, and vice versa.

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