Welcome to the MONEYLETTER Hotline for April 9, 2008

Earnings season is upon us, and the markets are justifiably nervous about what it will bring. Recession, however mild, and earnings growth simply do not go together. It is very early in the season, but the opening days have not been very cheery for investors. Investors focus almost exclusively on earnings during earnings season, which means that all other developments, while not ignored, have less influence on the market than normal.

The earnings are being reported against a gloomy assessment of the near-term economic outlook by the Federal Reserve as revealed in the Minutes of their last meeting. The Fed's own staff now looks for a mild recession over the first half of this year. For us the important word is mild. As we have said before, we all knew the economy was headed for a period of very slow or maybe even negative growth. Once that is accepted, what is important is that any recession be mild. The reason is that a mild recession will have only a minor repercussion on foreign economies.

With overseas growth only moderately affected by our recession, overseas stock markets, which we have favored, can stage a recovery as their fears about the severity of a recession here diminish. We believe that such a scenario is playing out now. We continue to see equities as the asset of choice in this environment. We counsel further patience. More stimulus is on the way.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, DWS Large Company Growth S is now rated Buy. Janus Mid Cap Value is now rated Hold. For international stock funds, two funds are now rated Buy: Matthews Asia Growth & Income (closed) and Fidelity Global Balanced. Three funds are now rated Hold: T. Rowe Price Emerging Europe & Mediterranean, Fidelity Emerging Markets, and Driehaus Emerging Markets Growth. Two funds are now rated Sell: SSgA Emerging Markets and Fidelity China Region.

The Economy – The Fed minutes and last Friday's employment report for March say it all. The economy has been losing jobs at a high rate during the first quarter, with the March loss at 80,000. While painful, these losses are smaller than is usual during a recession. The issue now is whether the losses will widen or hold. Considering the stimulus of rebates about to kick in, we expect the losses to remain contained. That is one reason we expect only a mild recession. But oil prices are a wild card, and right now they are heavy negative. Still we look for the stimulus to provide a lift as we move into the last half of the year and growth, though slow, resumes.

The Stock Market – We are well aware that the overseas markets, especially Asia, have been battered during this bear period. The Chinese market in particular, after its spectacular performance the past two years has been crushed. Although some analysts are calling for more declines, we sense that the Asian markets may be approaching a bottom. The underlying economic numbers for Asia, despite the gloom, continue to show relatively rapid growth. We remain positive on overseas markets. Also, we continue to see equities as the asset of choice.

The Bond Market --

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

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