Innovest Market Commentary for March

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The Economy

In Shakespeare’s Julius Caesar, the soothsayer warns Caesar of impending trouble.  “Beware the ides of March” is the warning that foreshadows Caesar’s impending death.  The ides of March in 2011 provided its own troubles, though this time not for our favorite Roman emperor but for the world economy.  Conflict in Libya has caused bloodshed and political confusion, with no real resolution in sight.  Political unrest across the Arab street continues to be a concern.  The massive earthquake in Japan and the subsequent damage to the nuclear facility at Fukushima was the worst nuclear disaster since Chernobyl.  Spot prices for WTI crude oil reached $108.  Europe continues to confront its own financial problems with respect to Portugal, Spain and Greece.  The list is long and scary.

And yet despite this slew of terrible geopolitical headlines, U.S. and global economic data remained reasonably positive.  How could this be?  Economic conditions continued to improve, albeit slowly.  As witnessed by record low interest rates and quantitative easing, Fed Chairman Bernanke has kept monetary policy extraordinarily accommodative—a primary reason the U.S. economy is on the mend. 

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