The good news in the municipal bond market: There is strong investor
demand, which is bidding up prices. Not only is the domestic desire for
munis running hot, the presence of negative interest rates in developed
Europe and Asia has escalated the amount of money flowing in from
overseas banks, pension funds and other institutions.
While U.S. stocks managed to eke out a small positive in the first
quarter of 2016, bottom-line growth for the same period is coming in
negative. It’s the fourth-straight quarter of negative earnings growth
for the Standard & Poor’s 500. The last losing streak this long came
during the depths of the financial crisis/Great Recession.
One of the most common storylines regarding U.S. equities these days is
that value stocks may finally be ready to turn the table on the growth
stocks that have been outperforming since the current bull market began
more than seven years ago.
It’s been a wild 2016 for the U.S. stock market. Panic-selling began
during the first six weeks of the year, followed by a powerful rebound
that quickly reversed double-digit losses in large- and small-cap
indices. Now the Standard & Poor’s 500 is within sniffing distance of
the all-time high attained last May.