The Day After

Markets were already weak yesterday before the news out of Boston hit.  The terror bombings there {and yes, these were terrorist attacks, the only issue is whether it was homegrown or from overseas} added to an already weak market situation.  

Markets have turned around this morning.  Better than expected corporate earnings and some better economic numbers are helping.  The fact that consumer prices declined in March owing to cheaper gasoline is probably the brightest overall economic takeaway from today's reports.  

The market is still in this churning phase, unsure about the next several quarters.  Year end S&P 500 numbers are still in the $110-112 area for much of Wall Street.  That range seems to high to me and I'm still using $106.50, however it is equally as likely that my estimate is too conservative.  I'll still maintain that we will know a lot about the economy going forward from corporate earnings reports we see this week and next.  

By-the-way, if corporate earnings would actually come in around $112 this year, then the S&P 500 is trading with a 13.9 PE, a 7.2% earnings yield and a nearly 2% dividend yield.  A 15 PE on that number gives you a target range of 1,680-1,700 on the S&P 500.

In terms of the attack in Boston, I think everything that needs to be said has already been discussed.  The event hit very close to home.  My In-laws live not too far from where the attacks took place, my son works just a few blocks from there and one of the Boston Boy's daughters ran the first 15 miles of the race.  Given all that you can probably guess what I'm thinking today.  What I'd like to see happen is that when they catch the perpetrator or perpetrators and if they're found guilty, {this is America after all} let them run their own special Boston Marathon along the same route and then let the good people of Boston properly express their "appreciation" to these evil-doers for what they've done to their city and to their people.  I'll never get my way on that, but to me that would be justice.

I have to be out tomorrow to due to a very sad event which I may discuss in the coming days.  I will be back here hopefully Thursday.

*Long ETFs related to the S&P 500 in client and personal accounts.