HIGHLIGHTS

• S&P 500 +0.87%
• Despite a rally this year, less than 1/3 of the stocks in the S&P 500 have outperformed the index.
• Apple and Microsoft make up 14% of the S&P 500.
• The S&P trades at 18x next year’s earnings versus a 16.9x five-year average (for the period ending 2019), and interest rates are much higher now.
• The average recession drops EPS by 31%.
• The debt ceiling crisis is still out there and will have to be dealt with soon.

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MARKET RECAP

• S&P 500 -0.1% for the week
• Most of the advance this year is due to the largest 20 stocks in the S&P 500.
• The equity risk premium, currently 1.59%, is the lowest since October of 2007.
• CAPE is at 29, in the 90th percentile.
• OPEC announced a surprise cut in oil production; energy moved up in price.
• US bank lending fell in the last two weeks of March by the most on record.

SCOREBOARD

MARKET RECAP

A big week for stocks as US markets rallied by 3.64% and international stocks by 3.37%. Bonds were off by 0.52%.

A winning quarter wrapped up on Friday, with US markets up by 7.2% and the Nasdaq up by 17%. Bonds also rallied for the quarter, up by 3.23%, as the 10-year yield fell from 3.826% to 3.491%. The much-feared recession has yet to arrive, and the labor market is still strong. The Fed has continued to raise rates, but that did not stop a winning quarter.  Estimated earnings for the quarter just ended are expected to drop by 4.6%, following a 3.2% decline in Q4. But investors seem to be looking past all of that.

For all the predictions by the “experts” that the market will turn down with all of the bad news, stocks have taken a near-term turn upwards and are back up the declining trend line.

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