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It’s easy to be downbeat about the prospects for stocks lately with March’s sickly looking non-farm payrolls report and the possibility of a new Korean conflict weighing on investors’ minds. Investors will start keying in on something other than the Fed beginning Monday when the first quarter earnings season kicks off. But with the ratio of negative to positive corporate guidance running at a 4.5 to 1 clip, it’s looking doubtful that corporate earnings will surprise to the upside.

The S&P 500 shed one percent the past week as a week of unsettling economic data fuelled concerns that the country’s economic recovery might be losing steam. Also stoking investor concern is that three quarters of the S&P 500’s strong gains since last fall has been driven by an expansion of the index’s multiple. With the S&P 500 trading at nearly 14 times forward earnings, any pullback in first quarter corporate earnings could be the disconnect necessary to send stocks lower.

News out of Europe was no better, with the pan-European FTSE Eurofirst 300 index falling 1.6 percent on Friday—it’s worst single day in 2013—leaving it with a loss on this holiday-shortened week of 2.2 percent. The recent bungling over the bailout of Cyprus has further reduced the appetite of global central banks to hold euros with recent International Monetary Fund (IMF) data showing the proportion of euro reserves globally at their lowest level since 2004.

Commodities have been taking it on the chin, with the CRB index falling several points this year and breaking the typically tight correlation that had existed between stocks and commodities. The improvement in China’s economy continues to go in fits and starts, impacting the fortunes for resources, while U.S. investors have focused on a fairly steady diet of good news for the domestic economy. If the global economy can get a reboot in late this year or early next year, the correlation between the S&P 500 and the CRB could once again reconnect as investors focus on a stronger global economy in 2014 and beyond.

The only major index bucking the downward trend last week was Tokyo as it basked in the announcement that the Bank of Japan will aim to double the monetary base over the next two years through the aggressive purchases of long-term bonds. Beyond the monetary fireworks, Japan’s prospects are looking up, with big manufacturers sounding less glum and with upward revisions being made to the country’s second quarter GDP growth expectations. Also helping matters for Japan is a falling yen, which extended its slide against the U.S. dollar touching a three-year high above ¥97 to the dollar.

But despite the current sense of gloom, there is no real cause for worry over impending downdraft for U.S. equities. The March jobs report despite its dismal showing still managed to eek out a decent 0.3% monthly advance in hours worked. And the S&P despite the giveback of the past few days, is up almost 8 percent this year.

Despite the resetting of expectations, March readings of ISM, payrolls and consumer confidence are pointing toward a setback rather than an outright recession. This suggests that we might experience a couple of quarters of slower-than-normal growth before resuming an upward trajectory. Home sales as well as household fundamentals, the bedrock of the American economy, appear to be in good shape and coupled with lower gasoline prices, there appears to be a decent springboard for solid economic growth in the last half of 2013.

For my part, I’ve been doing a little profit taking of late, trimming some positions in some of the higher beta sectors of the market. I continue to think the beta trade will work in the last half of 2013, however, I’d rather pick away at the beta trade in doldrums of summer than try and squeeze out a couple of points in the here and now.

The S&P 500 sectors with the highest consensus expectations for an earnings uplift include Telecom Services, Utilities, Information Technology and Consumer Discretionary sectors. Classically defensive sectors such as Utilities and Telcos seem like the best place to whether this blip on the radar until the solid fundamentals of the U.S. economy once again take over as the key driver of the stock market.

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