The latest news out of Europe likely came as no surprise, but nonetheless it brought a prodigious blow to stocks worldwide.  For more than a year, European governments have called for sovereign debt solutions through a simple process; better alignment of government spending with tax receipts.  To say it another way, stop spending more than you collect.

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Stocks suffered their worst showing of the year last week following another disappointing nonfarm payrolls report.  February and March numbers were revised upward but two consecutively weak reports have left investors questioning the recovery’s momentum.  Perhaps the “sell in May and go away” theme is not such a bad idea.  Is the economy about to pitch into the abyss? Or, is it simply coasting through a pause period?

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The notoriety of “Sell in May and Go Away” is weighing on investor sentiment as first quarter earnings season comes to a close.  For the last several weeks, alternating data from around the globe turned everyone’s attention to the latest earnings reports; the hope of finding some “good news” gave markets a lift.  Be that as it may, corporate profit reporting is nearing the finish line.  Many of the leading names failed to beat expectations while others surprised to the upside.  As of this writing, the race stands at….

 Download the April 30th Market Perspectives

Springtime is a favorite time of year for most of us.  Flowers bloom, trees show their green and the scents and sounds of summer lay just ahead.  But this wonderful season has been devoid of one sound that we all would like to hear; hammers and nail guns!  Rather, we continue to hear the howling winds frm Europe as they keep investors attuned to a protracted slowdown in spite of the temporary fix in Greece.

Two steps up, one step back.  The stock market has used that formula successfully to sustain a rally across an improbably six-month span.  Brief periods of strong gains are followed by some retracement: nothing too massive, just enough to whet the appetites of institutional investors trying to buy back in.  That has enabled the market to climb this stair-step to multi-year highs.

Good Friday didn’t live up to the connotation that its name suggests.  Instead, we started the holiday weekend with a disappointing March employment report.

Tuesday, the latest FOMC minutes started the pressure-filled week with the Fed confirming its position on monetary easing. There has been no ambiguity in the most recent run of FedSpeak; Ben Bernanke has made it clear that additional easing is unlikely. In spite of the Fed’s position on further easing, traders have become complacent with the notion of another “Fed Rescue” and subsequently stocks have continued to move higher. This notion of complacency can result in painful lessons that have been learned many times; that has nothing to do with investor’s ephemeral memory.

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]]> http://northstarfg.com/market_perspectives/market-perspectives-04-10-2012/feed/ 0 http://northstarfg.com/market_perspectives/market-perspectives-4-2-2012/ http://northstarfg.com/market_perspectives/market-perspectives-4-2-2012/#comments Mon, 02 Apr 2012 18:50:09 +0000 Phillip L. Clark http://northstarfg.com/?p=1996 Fed’s Pessimism Leads To Rising Stock Market 

Now that the first quarter is history, we can confirm that it wasn’t as strong as hoped.  The two standouts are housing and manufacturing; neither have managed to reach earlier forecasts.  Manufacturing improved at a much slower pace and housing may be signaling another dip.  Continuing with the same theme, consumers are doing most of the heavy lifting.  When we compare first quarter 2012 to fourth quarter 2011, little has changed in spite of optimistic forecasts.

In a normal recovery, low interest rates can provide needed liquidity that ultimately unlocks credit and creates growth. That has happened, to some extent, but according to Ben Bernanke, even he doesn’t have much confidence and sees the need for more stimulus.

Last week marked one of the first in which we heard little or no news regarding European sovereign debt.  Greece managed to avert immediate bond default, for now.  Nonetheless, investors in Europe and the U.S. took this as a positive sign, thus sending stock prices higher, yet again.

Just when the markets seemed ready to correct last week, the Friday payroll report provided the impetus for another winning week.  In fact, for three consecutive weeks and nine of the past ten, stocks have moved higher.  The latest payroll report brought a sigh of relief when the results came in better than economist’s expectations.  But much to the frustration of bullish investors…