Earnings, Health Reform, and Interest Rates

This was a most unusual week for an investor. At the end is some information on Palm Sunday. This newsletter will cover 3 topics: earnings, health reform, and interest rates.

Corporate earnings continue to come in stronger than anticipated. By a ratio of about 4 to 1, corporations reported positive earnings above projection compared to missing an earning projection. This is very bullish for the stock market as the ratio is normally not this high. Given that this year the manufacturing and service sectors continue to grow this period of better than anticipated earnings should continue for the next quarter.

The heath reform legislation was signed on Tuesday. The stock market responded by remaining relatively flat. A reaction was seen in the bond market as investors sold long term treasury bonds on Wednesday and Thursday resulting in higher interest rates. On Friday, long term interest rates started going back down. These interest rates went up because of a belief of higher interest rates associated with a higher debt level. On Friday, interest rates reversed course as no suitable alternatives exist.

The short term impact of the health reform legislation is very minimal. Now many people are on the news are stating doom and gloom. Please ignore these people and relax from an investing perspective.

Palm Sunday

Palm Sunday is the sixth Sunday of Lent and the last Sunday before Easter. It is also known as Passion Sunday, Willow Sunday, and Flower Sunday.

Palm Sunday commemorates the triumphal entry of Jesus into Jerusalem, where he would be crucified five days later. According to the Gospels, Jesus rode into town on a donkey as exuberant crowds hailed him as the Messiah and spread out palm branches and cloaks in his path.

The event commemorated on Palm Sunday is told in all four gospels (Matthew 21, Mark 11, Luke 19, John 12). The Matthew narrative, the one most commonly read in services on Palm Sunday.