Dear Mr. Market:

The first quarter is in the rear view mirror and what a wild ride it was! The stock market started the year with the worst first 10 days in history and we finally experienced a ‘textbook correction’ of over 10%. Perhaps the most shocking part is when it was all said and done, Mr. Market rallied in March to finish out Q1 just above break-even. Volatility like this is typically played out over a 12-month or longer cycle, not in one quarter.

The question that investors are currently asking is … how does the rest of 2016 play out? Turn on your television or open any printed material and you will quickly be overwhelmed with the various talking points. Just look at a few of the headlines that have popped up last week:

• Housing starts declined -8.8% in March.
• Auto sales fell at a -14.6% annual rate in Q1.
• Business investments in equipment fell -8% the first three months of this year.
• Large declines in military spending by the government in Q1 will add 0.1% percentage points to the real GDP.
• Industrial production dropped -0.6% in March coming in below consensus of 0.1%.
• Production of high-tech equipment increased +0.5% in March, up +2.1% versus a year ago.

These are real economic data points that have driven financial headlines over the last few weeks. In our opinion here’s what they mean (or don’t) and how we think the rest of 2016 will play out in plain English: Continue reading →