Yogi Berra was quoted as saying that it looks like “Déjà vu all over again.” The Summer of 2011 is starting to look and feel like the Summer of 2010. The Summer of 2010 started off with the lingering effects of Greek debt restructuring and concerns about weaker than anticipated economic numbers. We have those same issues this Summer. We were also still struggling with the uncertainty of the impact of the British Petroleum oil spill on the gulf coast economy and we liken that event to the uncertainty regarding the U.S. debt ceiling issue. Last August, Ben Bernanke, the Federal Reserve Chairman, announced QE2, to provide further monetary stimulus to the economy. This Summer we will likely get some announcement from either the White House, Congress, or both, regarding a jobs package providing fiscal stimulus to the economy in front of the 2012 elections.
As a result we continue to believe that the stock and bond markets are in a trading range until some significant positive catalyst motivates more investors to purchase equities or to sell bonds. The catalyst could be better than expected corporate earnings and positive projections from corporations regarding the remainder of 2012. Second quarter earnings season begins in during the second week of July.