What I’m Watching This Week – 1 April 2013

Second Quarter already?  Well that was quick!

The markets continued their upward swing in the first quarter, much like they did in Q1 of 2012.  Seeing the Dow Jones and the S&P 500 basically gaining, percentage wise, what they accomplished in the entirety of 2012; gives investors a reason to celebrate. But I hope they aren’t getting drunk with the revelry.  There’s nine more months to go, so let’s not get too out of sorts.  With the end of first quarter, 86 companies in the S&P 500 issued negative guidance for what they expect to report in earnings for Q1 2013, in little over a week from now, while only 24 issued positive guidance for the quarter.   Yes, that was a collective D’oh! you just heard.

The U.S. economy endures, while Europe’s weakness continues, and uncertainty in Asia has dragged market performance down in that region.   Europe’s problems are far from being resolved, not that you haven’t noticed the last few weeks.   I firmly believe that U.S. economy has enough momentum to produce a reasonable GDP number without all the Gloom and Doom crowd harping on about inflation.  But if economic conditions improve at a much faster pace, inflation will present an uncomfortable situation across the board and of course the G&D crowd will be all over the networks with their “I told you so” chant.  Read that again, if the economy improves faster, the Gloom and Doom gang will be cheering.  See the disconnect with logic there?

I remain confident.  One massive bright spot I see (and have been preaching about for years now) is the energy sector.   It’s, in my opinion, undervalued, and U.S. natural gas could be the play of the century.  The fundamentals make it even more obvious, after ages of depressed natural gas prices, production and infrastructure growth is readily apparent.  Opportunities to ride the coming natural gas tsunami, at prices this relatively affordable, won’t last forever.  In my opinion this is a once in a generation chance to participate and at the same time watch the U.S. become more energy independent.  I remain confident, cautious and eagerly optimistic.

Have a wonderful week!

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