Sage Advice Quarterly Market Review 1Q1997

Poor Goldilocks. The bond bears are tired of eating the moderate growth/low inflation porridge that has been fed to them for the past two years, and are chomping for a higher-yielding feast now being promised by the statistical mills. The goldilocks scenario began to unravel in early December when it appeared that merchants would be blessed with gangbuster Christmas sales, a prospect based on strong customer traffic in the post-thanksgiving week. Although it soon became apparent that consumers were less ebullient than at first blush, the bear parade marched on, nurtured by several other indicators pointing to a stronger economy: housing activity surged, the trade deficit plunged, a key manufacturing index hit a six-month high and, lastly, the economy churned out more jobs than expected in December.