The market is primarily reacting today to developing news as to whether President Trump potentially asked the FBI to drop an investigation into former National Security Adviser, General Michael Flynn.  This will be the headline.  However, it is less about the headline then whether the time and attention to this matter could delay or derail policy development which would be positive for economic growth.  As a result, interest rates are down today as well as the odds (though still high) as to whether the FED will raise interest rates at the June FOMC meeting.  This is apparent in that the financial sector is leading the retreat today.

Market corrections are normal in the context of a bull market.  Corrections are often healthy in hindsight as they shake out the weak hands and build a better foundation to sustain the next leg up.  A correction may be due and the news of the day may be simply the catalyst for what we expected from some level anyway.  We believe this creates opportunity rather than a reason to let emotions get in the way.  We expect any further market draw-down will be relative shallow and short lived.  Patience will likely be rewarded not far out on the calendar.

We always remain focused on the fundamentals which remain sound.  The corporate earnings rebound has been solid, interest rates remain low and there is still plenty of liquidity to buoy the market. Though overall economic indicators have been somewhat mixed, they still point to the potential for modest economic acceleration going forward.

The market has traded in a narrow range of roughly 3% since mid-February and some complacency may have set in short term.  In fact, this is the first day in more than two weeks that there has been over a .5% daily move.  We expect there is an underlying bid for equities and still little competition for stocks.

We remain bullish intermediate to longer term as the underlying fundamentals still suggest better times ahead.  Enjoy the spring season.