The rosy optimism that colored Q1 (meaning, the first quarter… what are quarters?) is gone. The S&P was up 12% in Q1 and the European Index was up about 7%. As of last night’s close, Europe was flat.

What Happened?

U.S. Growth began to moderate into the second quarter. And concerns over Spain, and the rest of Europe, began mounting. The Spanish Index, the IBEX, is down 17% year to date and youth unemployment in the country is around 50%.

Long Hot Summer

The last two summers have seen huge stock market declines. The funny thing was, those declines happened after a very strong start to the year—that felt a lot like this year. Read NYT article: Rising Fears that Recovery May Once More be Faltering.

So Are We Destined to Repeat History? 

There is a saying on Wall Street: “Sell in May and Go Away”. What’s this all about? Historically, the market tends to register lower performance in the summer months than the fall/winter.

But, there are some good things going on right now.

What’s Good? 

Inflation is moderating. Gas and food prices have been falling. In response, some of the the BRICs (what are they?) have been cutting rates—which tends to spur growth. Brazil and India cut rates last week. Meaning, their concerns about slowing growth outweigh their concerns around inflation rising.

Also, as earnings season in the U.S. draws to a close, 81% of the companies which have reported have beat the market’s expectations—which has been positive for stock markets. Check out Apple- wow!

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