Earnings Season Begins

Last week we had two economic reports that were disappointing. First, the ISM non-manufacturing index came in below estimates and then, on Friday the March job report showed that we only created 88 thousand jobs. The markets reacted negatively to both reports, but we do not believe this is the beginning of a downward trend. What is truly important is economic growth. As we have stated in the past, we are growing albeit at a slow pace. Our expectations are the that markets are ripe for an earnings-based pullback. As we begin earnings season this week, the market will begin to trade on this data. However, don’t forget we are in a fed-induced market and although we don’t expect it if we have light earnings season the Fed’s actions will temper the markets response. We do, in the longer run, believe that regardless of the most recent data, the S&P will end the year above the 1,573 high set on April 8th.

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