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Good morning!
Stocks in the United States look to be under a bit of pressure this morning as investors and consumers continue to wrestle with the impact of $4.00/gallon gas prices on their respective wallets. As noted within our “Weekly Recap of the Financial Markets,” we believe that upward movements in oil/gas prices will have a negative impact on stocks. Conversely, downward movements should be beneficial for stock investors. Our best estimate is a continuance of the trading range that we have been in for quite some time until we get some more definitive resolution on the energy crisis.
On the fixed income front, we recommend caution as it appears that the higher energy prices have begun to spill over into other parts of the economy. Furthermore, several Officials of the Federal Reserve Bank have indicated that interest rates are at appropriate level, suggesting that, absent an unforeseen event, further rate cuts are unlikely.
Dennis Fagan
Chris Fagan