Quarterly Market Review, January – March

The markets recorded their best quarterly performance in 14 years
against sustained headwinds from Europe, higher gas prices and a fragile
recovery. We continue to...

The markets recorded their best quarterly performance in 14 years
against sustained headwinds from Europe, higher gas prices and a fragile
recovery. We continue to look forward to a period of recovery in the US
and all eyes will be on the election in November. Please let your
FineMark professional know if we can help in anyway.

The Markets
the U.S. economy continued its slow march toward recovery and Europe
managed to fight off the threat of a Greek default on key bond payments,
even higher gas prices couldn't stop equities from powering upward. The
S&P 500 registered its best first-quarter performance since 1998,
the Nasdaq managed to surpass its October 2007 high, and the Russell
2000 was only 15 points from accomplishing the same thing. Even the
Global Dow managed to beat the Dow industrials, despite the Dow's
gaining more in a single quarter than it did in all of 2011.
investors grew increasingly comfortable with equities again, reduced
demand for bonds sent yields back above 2%. Tensions with Iran pushed
oil prices as high as $108 per barrel, pushing both gas prices and
inflation higher despite concerns about slowing economies abroad. Gold
regained some of the ground lost last year but then gave back almost
half of those gains to end at roughly $1,670 an ounce. And after a
strong move during 2011's final quarter, the dollar stabilized a bit.

Quarterly Economic Perspective

  • The U.S.
    economy continued to recover. The Bureau of Economic Analysis said gross
    domestic product for 2011's final quarter rose 3%; that's sharply
    higher than the previous quarter's 1.8% increase. However, China and
    Europe both showed signs that their economies might be faltering; China
    lowered its 2012 growth target to 7.5%, both the eurozone and the larger
    European Union saw a 0.3% contraction in their economies, and Germany
    and France reported weakness in their manufacturing sectors.
  • Unemployment
    continued to fall, ending the quarter at 8.3%, its lowest level in
    three years. Meanwhile, the number of new jobs added to the economy
    exceeded 220,000 for three straight months.
  • In the largest
    sovereign restructuring on record, 85% of Greek bondholders agreed to
    swap their holdings for bonds worth almost 54% less. The arrangement
    allowed Greece to impose the same terms on most of its remaining
    creditors, qualify for a second round of financial assistance, and make
    key bond payments. The restructuring meant that financial institutions
    had to pay off on roughly $3 billion worth of credit default swaps on
    Greek debt.
  • The leaders of all but two European Union countries
    signed a treaty designed to impose greater fiscal discipline in the EU,
    and European banks refinanced almost €530 billion with the European
    Central Bank to help maintain the financial system's stability.
  • The
    Federal Reserve Open Market Committee said it plans to keep interest
    rates at "exceptionally low levels" through at least late 2014.
  • Despite
    dips in sales of both new and existing homes in February, both
    continued to be higher than the previous year (up 11.4% and 8.8%
    respectively). However, that didn't translate into higher home prices;
    according to the S&P/Case-Shiller national index, home prices were
    at their lowest level since mid-2006. Housing starts also were down
    slightly in February, but both housing starts and building permits were
    up more than 34% from a year earlier.
  • Spiking gas prices
    translated into higher consumer inflation; a 6% jump in gas prices in
    February alone helped boost the inflation rate for the last 12 months to
    2.9%. Retail sales also were up 6.3% from the previous year, though gas
    prices accounted for part of that increase as well. Meanwhile,
    wholesale inflation was up 3.3% (the smallest yearly increase since
    August 2010).
  • Fifteen large banks passed the Federal Reserve's
    stress tests designed to gauge their ability to withstand a financial
    crisis, but four others must resubmit plans that show they have
    sufficient capital.

Data source: All information is
based on sources deemed reliable, but no warranty or guarantee is made
as to its accuracy or completeness. Neither the information nor any
opinion expressed herein constitutes a solicitation for the purchase or
sale of any securities, and should not be relied on as financial advice.
Past performance is no guarantee of future results. Equities data
reflects price changes, not total return.

The Dow Jones
Industrial Average (DJIA) is a price-weighted index composed of 30
widely traded blue-chip U.S. common stocks. The S&P 500 is a
market-cap weighted index composed of the common stocks of 500 leading
companies in leading industries of the U.S. economy. The NASDAQ
Composite Index is a market-value weighted index of all common stocks
listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap
weighted index composed of 2000 U.S. small-cap common stocks. The Global
Dow is an equally weighted index of 150 widely traded blue-chip common
stocks worldwide. Market indexes listed are unmanaged and are not
available for direct investment.

Market Summary 2012 Q1 Final.pdf(623.4 KB)

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2011-2014.