March 30th Weekly Market Update

The Final Four of the 2015 NCAA College Basketball Tournament is set with Kentucky, Wisconsin, Duke, and Michigan State headed to Indianapolis to determine this year’s college hoops champion. In that spirit, we share our own Final Four for stock market investing: the economy, earnings, valuations, and technicals. Based on our assessment of these four factors, we expect stock market investors may be “cutting down the nets” due to potential high-single-digit stock market gains in 2015.

The U.S. economy has slowed during the first quarter of 2015 due to a combination of factors, chief among them the spillover effects of plunging oil prices and the booming U.S. dollar. Cheap oil has led energy producers to cut spending. The strong U.S. dollar has reduced the attractiveness of U.S. exports, contributing to a slower pace of growth. In addition, record snowfall and bitter cold throughout regions of the country during February and the West Coast port slowdown negatively impacted economic activity. Despite these impediments, U.S. gross domestic product (GDP) remains on track to grow at a 1 – 2% pace during the first quarter of 2015.

We expect the reversal of some of these factors to help GDP growth return to 3%-plus in the coming quarters. Better weather should be a given. Consumer spending is beginning to benefit from lower fuel prices, while transportation costs have come down. We are seeing a bit of a pickup in growth overseas, particularly in Europe, which is benefiting from the weak euro, while China is poised to enact more stimulus to achieve the 7% growth target for its economy.

For the full article: MARKET’S MARCH MADNESS