Last Week in Brief: April 18

April 18, 2014

Following the prior week's correction, markets rebounded last week on calming economic data and mixed corporate earnings.



The Good


Spring fever has investors hoping that the preponderance of companies reporting earnings this week can catapult equity indexes to new highs. Good piece by Reuters here.


Further, rail traffic, hotel occupancy rates, retail sales and L.A. port traffic are all positive.



The Bad


While the earnings "beat rate" for the S&P 500 has run at 60 to 70% for the last three years, the index is currently projected to report its first year-over-year earnings decline for Q1. More here.


Moreover, gas prices are rising, China continues posting disappointing economic numbers, housing starts are weak, and eurozone growth is lagging.



The Ugly


The next time a food-service employee provides your change and then handles your food, you may think twice. Especially after reading this article.



The Bottom Line


Clients continue to ask if the last five years positive returns have contributed to a speculative bubble. The answer? No.


While markets have risen markedly, they were coming off of a very low floor. Much of the rise was simple mean reversion. Some has been QE related. And some can simply be attributed to fundamentals.


Check out a good piece on the topic of bubble formulation here.



Weekly Results


Major markets finished higher last week. The DJIA rose 2.35%, the S&P 500 gained 2.71%, and the Nasdaq advanced 2.39%.  Small cap stocks rose 2.38%.  And the 10-year Treasury bond yield gained 9 basis points, finishing at 2.72%. Gold lost $23.42 per ounce, or -1.78%.

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