Despite lower gas prices and improved consumer sentiment, consumer spending was disappointing during the first quarter.  He thinks GDP estimates for Q1 will be reduced a full 1% when released next week.  Largely because of this, he sees no chance of the Fed increasing interest rates in June and only a 50/50 chance in September.  (I think the odds of any increase this year are less than 50/50.)

He thinks the wild 280-point drop in the Dow last Friday was all about Greece, which will continue to unsettle the markets.  The EU will never expel Greece, and Greece will realize the impact of leaving the euro will hurt even worse than staying with the euro.  This is because their own currency, the drachma,would lose value so quickly that “hundreds of billions of dollars of Greek wealth could be destroyed in a day.”  (I do feel sorry for the Greek people, but their older generations have robbed their younger generations.)

Corporate earnings have been better than expected so far, but the full impact of the strong dollar is only just beginning.  For example, it is costing P&G some 7% in corporate earnings.  The strong dollar will continue to hurt corporate earnings for the foreseeable future.  Nonetheless, the stock market is NOT currently OVER-valued.

You just have to believe anybody so kindly, don’t you?   No, but I do believe this one!