The weather has ruffled the feathers and excited the senses of all who live, eat and breathe in Northeast, Ohio –both man and animal alike. We’re starting to venture out from our winter nests up here, taking walks in the park, riding our bikes, and gassing up the Harley for the first time. Parking spots in the Cuyahoga Valley National Recreation Area were harder to come by on Saturday and Sunday; I guess I wasn’t alone. You’d have thunk we had just colonized a new territory given the bustle of activity following a long and dreary winter.
The sounds of spring have certainly lightened the moods of investors as well as the market has done quite nicely over the last two weeks and as the sense that we’ve put in some intermediate term lows has taken hold. In spite of continued soft economic data, initial negative earnings reports from the likes of AMD, Alcoa and UPS, and the release of the March Fed minutes characterizing the economy in recession, investors just want to believe.
Earnings season is getting ready to start once again. At the beginning of January, bottoms up forecasts for the S&P 500 were calling for 6% earnings growth, but this figure has steadily fallen to a negative 12.2% this past week as the bearish sentiment of the past few months has worked its way into published expectations. While the bulk of the expected decline is still centered in the financial services industry, the weakness is expected to find its way into other areas of the economy as well.
The good news is that stock market bottoms almost always precede the lows in the economy. While this Sunday’s forecast includes the word “snow showers” in it, I also know that Spring is here and that it can’t rain forever.
