"The U.S. financial markets are still fragile and remain susceptible to disruptions caused by geopolitical events. As long as inflation remains low, which it is, the Fed is likely to show restraint when raising rates. This will allow the economy to continue to grow at a rapid pace and for corporate earnings to advance at a strong year-over-year rate. . . . Until earnings begin to falter, short-term market declines should be viewed as buying opportunities."
Walnut Creek, Calif.
"The consensus of top-performing investment newsletters is that the stock bull market is alive and well. In fact, they are even slightly more bullish today than they were last December, the last time I wrote about their consensus market view. . . . You might conclude that this bullish consensus is a bearish omen, on the contrarian grounds that the market rarely accommodates the majority. But this conclusion would be too hasty. Note that the bullish consensus I am reporting is not among all newsletters, but among only a small subset of them. To help assuage your contrarian concerns, let me point out that the average U.S. equity exposure among all letters is much lower than the best performers' consensus. . . . The latest reading from the Hulbert Stock Newsletter Sentiment Index . . . stood at minus 14.3 percent, reflecting an average recommended exposure of being short [in] the stock market."
The Hulbert Financial Digest
"No matter what the news, further correction was expected, and further correction has developed. The interest rate-induced selling reminds us of a similar instance in 1994, again as represented by the Dow Jones Industrial Average. The alarm in 1994 was more dramatic, as Wall Street was caught off guard by a surprise interest rate increase. However, the specter of higher rates, or the reality of higher rates, has the same chilling effect on the financial markets. In 1994 . . . the selling capped off a total correction from the early . . . highs of about 10 percent. Interestingly, a 10 percent correction now on the Dow from the February highs would take the market to exactly the same level -- 9,660 -- as is also suggested by a one-third correction of the initial bull market rebound rally. In any case, in 1994, the market subsequently started to work its way higher over the balance of the year, albeit with a high degree of choppiness, and we expect the same in 2004."
Richard L. Evans
The Renaissance Report