In terms of performance, the first quarter amounted to the equivalent of a good year! The major stock market averages were up approximately 12%; our equities were up 15%.
While worries about European sovereign debt resurfaced again last week and a lot of attention has been focused on whether China will experience a soft landing, US companies are continuing to show good earnings , great profitability and impeccable balance sheets. Because interest rates are still artificially suppressed by Federal Reserve policy and alternative investment vehicles (including gold) have disappointed recently, we see the potential for rebalancing towards US stocks over the coming months.
Despite the strong first quarter, all is not rosy. Perhaps after the elections our Politicians will find a way to become more fiscally responsible. Crude oil and gas prices at the pump have moved to uncomfortably high levels, but natural gas prices have moved in the other direction and offer exciting long term substitutability benefits. The U.S. housing recovery appears to have begun and an American manufacturing renaissance is taking place. These developments help to offset the continued macro risks making headlines.