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This year continues on the path of solid gains, but it has certainly not been a smooth ride.
Stocks and bonds have had to steer clear of geopolitical risks, budget issues, natural disasters and the ongoing debt crisis in Europe.
In spite of these issues we have been able to generate positive returns.
Stocks enjoyed their best first quarter in 15 years, but, the question is, will we be able to continue on this pace the rest of the year?
Bonds hit some speed bumps in the first quarter, but low to middle single digit gains still looks possible. In any market, there are always opportunities, you just need to know where to look for them.
It’s been two years since the S&P 500 hit a low of 677. Since then the market is up approximately 100 percent on a total return basis.
There have been many hurdles to overcome. State and municipal budget battles, renewed European debt concerns, rising energy prices and unrest in the Middle East.
On the positive side, corporate earnings continue to be strong and unemployment numbers are slowly moving in the right direction as more large and small companies look to increase their workforces.
Energy and industrial stocks have lead the way so far this year as well as strength in the technology sector.
The worst performing sectors have been consumer staples and utilities though both have had positive returns for the year.
Returns from International stocks have not faired as well as domestic stocks as the MSCI EAFE Index and the MSCI Emerging Markets Index have underperformed U.S. stocks.
There are also concerns over rising interest rates in China, as they have been raising rates since late last year to try and head off inflation. Brazil and India also have struggled to contain inflation in 2011.
As for the U.S. economy, growth continues at a moderate pace with manufacturing leading the way.
Consumer and business spending continues to be solid in 2011.
Employment has picked up, but growth still remains slow. On the housing front new home sales remain at an all-time low down 28 percent year-over-year.
Commodities have been in the spotlight throughout 2011 as gold and silver have reached all time highs, and oil has been trading at more than $100 a barrel for the last couple of months.
Although, just in the past two weeks commodities have pulled back and prices have come down.
This may be the first time in years as we head into summer, that we actually see falling prices at the gas pumps.
The bond market continues to make slow gains as rates are still hovering around all time lows.
Government and corporate bonds have had modest gains for the year as high yield bonds continue to lead the way as they did in 2010.
Municipal bonds have started off slowly with new supplies overwhelming the market.
Moving forward, we continue to keep a close eye on the markets, equities and fixed income and look for opportunities.
Local investment officer