As far as the markets, we had another modest gain last week, as the Dow was up 1.0%, but the NASDAQ continued its roll, advancing 4.0% and extending it’s all time high. The technology-heavy index has now gained 19% YTD and an astonishing 59% since the market lows on March 23. The Dow continues to lag, as it’s YTD totals still remain down 7.4%. Diversified bond funds also edged up about 0.3%, and tax-free muni bonds jumped about 0.6%, as they continue to emerge from their steep losses (>10%) since the beginning of COVID. All in all, I am pleased to announce that all of our portfolio models are now positive for the year, and only lagging their pre-COVID peaks by less than 2%. That is certainly a good feeling, when compared to the fear in late March after the markets were down 35% in five weeks, with no end in sight. I’m sure we all prefer today’s feeling a whole lot more, but I also don’t think we’re out of the woods yet.
This is where the rubber meets the road. We are now entering the beginning of corporate earnings season, and it will be very interesting. Corporate earnings for Q2 are expected to lag last year’s quarterly earnings by a whopping 44%! Of course, earnings are expected to be lousy, so the market’s response to these earnings will likely be less than what the corporations will predict their future earnings to be. Let’s see if the CEOs have the courage and foresight to project future earnings, or will they remain “chicken” to make these projections? Time will tell.