Quarterly Outlook Summary

The markets and the economy continue to muddle along although with some volatility. Even though the Federal Reserve has raised short-term interest rates one notch, longer term rates surprisingly declined slightly. Try as they might, the cannot generate any inflation as commodities and especially oil prices remain weak. The employment numbers in terms of job creation and unemployment look very good. Weekly unemployment applications are now the lowest since 1973.

In this environment, interest rates are the driving force in the market. After the recent rate increase, the market dropped significantly in January before recovering. The outlook is problematic given a strong job market and wage gains, but alas, weak inflation and commodity prices. Arguably, these would be ingredients for strong economic growth if only the Fed could restrain its need to raise rates so that they could once again say they are in control.

Many risks remain. China has thus far been moderately successful in navigating an economic slowdown caused by over building. That could change. In a few months, the UK will hold a referendum on whether they will remain a member of the EU. If they leave, the EU itself will be significantly weakened and could be very problematic for continued growth there, which, would easily affect global growth.

Our individual holding continue to perform well despite these market and economic uncertainties. We continue to be on the lookout for additional and new opportunities in which to re-invest the proceeds of the Sandisk buyout after it is complete.

Please remember that because these quarterly thumbnail summaries are very brief, please do not hesitate to call me if you wish to discuss your account or our outlook in greater detail.

Very Best Regards,

Joseph L. Toronto, CFA

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