Here’s the news of the week – and how we see it here at McAlvany Wealth Management:

A “suckers” rally in the making?

The Nasdaq Composite’s touch-down at the 200day moving average combined with dovish remarks by Janet Yellen in which she urged central bankers to be mindful of how “short” the Fed is of its goals, had stocks enjoying a nice bounce off interim lows. As for 1st quarter earnings results, the effect on stock averages seems to be rather inconclusive, since most speculators have taken a weather related indifference to the numbers. Stocks finished the week with modest gains, Treasuries were clubbed, the US Dollar was flat, while overseas markets rallied on the heels of slower GDP growth in China (think more “QE”).

Behind the many successes in the game of “beat the number”, corporate earnings quality remains rather poor (with the exception perhaps of Honeywell). Yet on the whole, speculators seem to be satisfied with the mediocrity – as long as it doesn’t disrupt gainful momentum. But if there is one area investors should be paying attention too, it would be the banking sector, where the ongoing decline in lending is posing a threat U.S. “recovery” prospects. Of note, JP Morgan’s total lending revenues fell by 43.0% on a year over year basis – highlighted by an 84.0% revenue shortfall in mortgage related businesses.

The Precious Metals were found consolidating in and around old technical levels, perhaps biding time ahead of clearer (non-weather related) economic signals and/or an actual change (elimination) in Fed “tapering” plans. Crucial to settling that debate will be the news as we head into April and beyond. In the meantime, there exists consistent support for gold at the $1,285 level where physical buying has been noticeably strong.

MWM offices will be closed Friday April 18th in observance of Good Friday.

Happy Easter!

David Burgess
VP Investment Management