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Good Morning!
Stocks appear in a mode of consolidation after the twenty-some percent run-up that we have experienced over the past four or so weeks. A low volume consolidation, similar to a sprinter taking a breather rather than continuing on, almost certain of collapse from exhaustion, would be healthy and allow for future gains. We will see how this turns out. The fact that we are entering earnings period should muddy these waters. We believe that, when all is said and done, earnings will be “very bad, but in line with expectations,” thus allowing for the stock market to exit earnings season sometime in early May at or around these levels. This is not a bad thing as the consolidation we noted above needs time to complete. We’ll see how this turns out.
As far as bonds/fixed income is concerned, we continue to like mortgage-backed funds, general obligation national municipal bonds and high-grade corporate.
Dennis Fagan
Chris Fagan