Stocks were range bound in the first quarter but there was plenty of movement within asset classes - particularly crude, credit and currencies. The resurgent US dollar had a notable impact on sector performance and stock dispersion was high. Market breadth (participation) was good and small caps bested large caps, a good sign. Despite the macro volatility we didn’t change our long term views which are based on a slow, but uneven, economic recovery. Technical trends are intact, but as we enter the sixth year of this bull market they are a bit stretched. Stock buybacks, dividends and deal making continued to be a tailwind for equities last quarter. Fundamentals are spotty and the macro environment could change quickly as we now have to deal with potential interest rates hikes. We foresee a consolidating, choppy trading backdrop that may be with us for a while. The market has come a long way and valuations are no longer cheap. Importantly, compared to relatively low interest rates and inflation readings valuations appear more favorable. This is a good environment for an active, tactical and prudent approach to managing money. Please click the button below for our detailed commentary on the first quarter and deeper discussion on the market.
Q1 2015 Market Insights