We are now at the end of the 1st quarter of 2015 and continue to see unprecedented volatility; moves of over 1 to 2% in a single day!  And although US economic activity appears to have faltered a bit, the good news is that evidence of recovery in the Euro zone is starting to surface. We suspect that some of the slowing in the US is due to adverse January and February weather. However, it is also possible that the fear of rising rates (which reached a peak in mid-February) combined with extremely detrimental US exchange rates is cause to dampen US economic optimism. In short, a series of unfortunate events has served to retard growth for a large part of the first quarter of 2015, and that negative psychology is likely to remain in place for at least the near term.

There is the potential for a Greece deal in the coming week and the market is not likely to underestimate the benefits of getting beyond the uncertainty from the Greek debt crisis. While the sign of a top in the Dollar is beneficial to a host of physical commodities, many commodities will see only limited gains unless expectations for a return to widespread “Global Growth” returns to the headlines! Many commodities still face rather negative supply fundamentals, and it will probably require a significant improvement in demand to overcome them.

Until earnings season begins with Alcoa’s report on April 8, economic data will be in focus… including the jobs report which will come out this Friday when the market is closed. The next big catalyst beyond the data will be earnings in April as once again estimates have been cut down drastically by Wall Street in an effort to soften the blow from the stronger dollar.

There will be lots of Fed speak ahead including Yellen who is scheduled to speak again Thursday morning. Markets still believe that the Fed will be on hold throughout the summer and that even when they do raise, it will be so small that markets will be happy with it. At least that seems to be their game plan this year.

With the new quarter beginning tomorrow, there is hope for positive seasonality which should provide a strong tailwind for the market. Markets tend to rise both in early April and again at mid-month. Seasonal influences are working in this market as seen by last week’s pullback which tends to happen at the end of March.

Let me wish you a very Happy Easter!

Please contact us if you have any questions or concerns.

Thank you,

Greg

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