Welcome to the MONEYLETTER Hotline for April 2, 2008

Federal Reserve Chairman Ben Bernanke came the closest he has to date to suggesting the U.S. economy is facing recession today, opening up a profit taking opportunity after yesterday's booming 2nd quarter kickoff. Economic uncertainty reasserted itself after a day in which investors had enjoyed the hope that the worst of the credit crisis is over. The Dow Jones Industrial Average lost 45 points after posting a nearly 400-point gain on Tuesday.

The Fed chairman, in testimony to Congress, did not assure the markets that there would be further interest rate cuts this year. However, given the Fed's aggressive actions in the recent past, we remain in the camp that sees additional action as needed to keep the economy afloat. Monetary policy and the economic stimulus package should keep the recession, if it indeed comes to that, mild.

We continue to see equities as the asset of choice in this environment. We are going through the worst of it as far as the economy is concerned. We continue to counsel patience.

There is no change in our current allocations.

New Fund Ratings – There are no changes in the fund recommendations this week.

In case you missed it, last week Vanguard Growth Equity was sold and was in all three Vanguard-only portfolios. We substituted Vanguard Dividend Appreciation Index for the fund in all three portfolios. Fidelity Trend was sold and was in all three Fidelity-only portfolios. In the Venturesome and Moderate portfolios we switched the fund into Fidelity Fund. In the Fidelity Conservative portfolio we switched into Fidelity Blue Chip Growth. T. Rowe Price New Asia was sold and was in the Moneyletter Venturesome and Moderate portfolios. In both cases we switched the fund into Wintergreen Fund.

The Economy – The Commerce Department said factory orders dropped by 1.3 percent in February, about twice what most economists had been expecting. This was the second straight month of decline for this series. The Fed is typically cautious in describing the condition of the economy, but yesterday Chairman Bernanke appeared to yield some to the growing opinion that a recession is underway.

The Stock Market – Stocks are volatile as we expected, but the S&P 500 has gained approximately 7% from its low on March 17, albeit much of that yesterday. They are performing reasonably well considering the investment environment. Overseas, European markets are up about 10% over the same period, with Japan and Hong Kong up 12-13%.

The Bond Market --

The Select Portfolio – There is no change for this portfolio.

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