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When dealing with a recessionary environment the measurement of when things will turn for the better is often times expressed in terms of the declining rate of bad news, rather than there being any actual good news.  If there are less unemployment claims than previous months, we can point to that as a sign of improvement.

 

Along these lines, some not so bad news today is that manufacturing in the U.S.A. shrank again in April, allbeit the amount was less than in previous months;  therefore, a sign of improvement.  Stated differently, the domestic economy shrank at a 6.1% annual rate in the first quarter. according to the Dept. Of Commerce, which is lower than Q4's 6.3% decline.

 

We are entering a critical period now in the economy's recovery from the Sub-Prime induced recession.  The Market is now showing much stronger signs of recovery than it did in March.  However, the extent to which this recovery accelerates will depend on what investors do with their newfound profits, at least for those who actually have been entering the Market.  Also please keep in mind that Trillions of dollars still remain on the sidelines.  Will that money now be deployed and help push stock prices higher, or will fear still continue to reign supreme?

 

I cannot answer that question, nor do I care to for the short of it is that it has no actual bearing on how client portfolios are managed.  While we remain watchful of the varied forces driving the Market, the fact is that there are opportunities in the Market today.  We still remain defensive in posture while carefully re-entering in the market in small increments.