Economically, we still see no factors which suggest the overall expansion is ending; it is slowing. GDP was positive in April and remains at an annualized +2.5% rate according to Kiplinger; during the first quarter GDP grew by 3.2%. Inflation remains muted at the FED target of just under 2%, but is starting to slightly accelerate as tightness in the labor market is tending to push wages higher.

Consumer confidence, as well as business and consumer spending remain positive, although some lessening is beginning to appear. Jobs are still being created and corporate earnings are strong. The “Tariff Wars” continue to subside, and the trade gap narrowed significantly in April again. Rate changes in the next seven months are unlikely. The FED seems committed to a cautious, data-driven policy process, and as the month closed, the President announced he favored a rate cut. Positive seasonal factors will likely kick in over the summer, and the emergence of a bi-partisan infrastructure initiative could bode well for the summer period.

As we enter April, we feel that this will be a barely positive month, with weakness in the first three weeks and strength in week four. May 2019 will be very choppy. May is the beginning of the worst six months of the year. In addition, pre-Presidential election years are very weak. The historic probabilities are 53% for the Dow to be positive, and 59% for the S&P; the NASDAQ probability is 62%, and the probability for the smaller capitalization Russell 2000 is 65%. We see major political problems becoming less disruptive despite a split Congress; there will, however, remain unsymmetrical cross-currents and grand-standing which will result in some volatility during periods of market weakness.