Welcome to the April 8, 2009 issue

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Market views have changed little over the week since our last Hotline. The arguments continue over the efficacy of the Obama Administration’s moves and the Fed’s numerous programs. They will be decided only in hindsight. We are generally on the positive side.

We think the stimulus and the Fed’s massive buying of credit markets will have very positive effects. The Fed’s moves have already brought mortgage interest rates down considerably. The basis of much of the skeptics’ argument is that Washington is not bold enough, or that the political system will hamper what needs to be done. Maybe so. But nothing says that the programs in place are all that will be possible if the economy does not respond.

Meanwhile, above the din, the economy continues to show some evidence that the grip of the recession may be lessening. The one area where we are not seeing improvement is the labor market. There is no silver lining there. But, contrary to what we would expect, consumer spending appears to be holding up. If this continues – a big “if” – we will see further deceleration of the slide down. In fact, the expectation is that this quarter, while still negative, will be markedly better than last quarter. As we said last week, this is no time for unguarded bullishness. We are now cautiously optimistic about the next six months, with some stress on caution.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, two funds are now rated Buy: Wasatch Heritage Growth and Yacktman Fund. Four funds are now rated Hold: American Century Equity Income, Vanguard Dividend Growth, Westport R and UMB Scout. Three funds are now rated Sell: Tweedy, Browne Value, DWS Large Company Growth S and Fidelity Large Cap Growth. For international stock funds, Fidelity Japan is now rated Buy. Six funds are now rated Hold: Matthews Asia Pacific, Matthews Asia Growth & Income, US Global Investors China Region Opportunity, Fidelity Global Balanced, Matthews Asia Pacific and MSCI Japan (ETF). Two funds are now rated Sell: Artisan International Value and Vanguard International Value.

Fidelity Large Cap Growth is in the Fidelity family Venturesome model portfolio. We will switch the fund into Fidelity OTC Portfolio. Vanguard International Value is in the Vanguard family Venturesome model portfolio. We will switch the fund into Vanguard Emerging Markets ETF.

The Stock Market – We see positive signs in the market’s behavior the past week, despite Tuesday’s punishing selling. Selling is meeting resistance, and we are seeing late session buying, as we did to today. Up to now the late session sellers ruled the market. Change for the better is taking place.

The Bond Market –

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

The next Hotline is scheduled for Wednesday, April 15 at 7pm ET.