The first quarter of 2015 ended midst relief that perhaps the harsh winter weather was over as signs of spring energized consumers and travelers.

The first quarter of 2015 ended midst relief that perhaps the harsh winter weather was over as signs of spring energized consumers and travelers. Atlanta’s Hartsfield-Jackson Airport’s International Terminal was packed with “spring breakers” and families headed south to Caribbean climes. Despite a year-over-year increase in domestic airfares of about 14%, demand for travel is up, indicating rising consumer confidence. How do trends stack up for financial markets for the balance of 2015?

Weak first-quarter GDP reports are expected, given the brutal weather in the eastern U.S. that restrained housing starts and consumer outlays. Kiplinger expects the economy to show more life, moving from a 1st-quarter GDP increase of a tepid 1% to 3% for 2015 as a whole. Expected job gains and improvement in consumer incomes should propel purchases of homes, vehicles, and other products and services. With the S&P 500 Index relatively flat for the quarter, up 0.4%, consumer-discretionary stocks rose by 4.4%. Analysts indicate that the impact of lower fuel prices has yet to be felt substantially in consumer spending patterns.

The health-care sector of the S&P 500 rose 6.2% for the quarter. The Boston Globe (2/5/15) forecast health care costs rising by 7% in 2015, driven partly by the astronomical cost of specialty drugs. Older consumers, especially those on Medicare, should monitor their drug and supplemental plans carefully as insurers will alter contracts every year in an attempt to pass more costs on to policyholders. Just because a plan is touted by a senior citizens organization does not mean the plan is best for you based on your unique health care needs and drug formularies.

Last year if you were broadly diversified your portfolio underperformed relative to large capitalization U.S. stocks. However, the first quarter underscored the value of diversification as markets shifted. With the S&P 500 virtually flat and the Dow Jones Industrial Index down by -0.3%, what didn’t work last year came to the fore. Global stocks, last year’s also-rans, came to life with Japan, France, and Spain winners. (Data from The Wall Street Journal). Many analysts worry about high valuations for U.S. equities and are finding valuations outside of America compelling. Message? This is not the time to abandon global asset allocations despite 2014 underperformance when measured against U.S. large-cap indexes.

Worries about a strong U.S. dollar show up in price weakness for large multi-national companies and exporters. Last year small-company stocks were outgunned by big cap performers. In the first quarter the Russell 2000 small-cap index rose 4%, largely because such firms are less impacted by the stronger dollar and are more influenced by domestic consumption, expected to grow. Last year we advised not abandoning commitments to small- and mid-cap allocations in favor of chasing what was hot in 2014.

Technology performed well in the 1st quarter. The tech-heavy Nasdaq Composite Index rose 3.5% while still a bit shy of its old 15-year high. It has been a long slog from the dot.com bubble crash of 2000-2002, but technology is on a firmer footing now versus then.

The decline in oil prices slowed in the first quarter with U.S. crude prices at $47.60 a barrel on April 1, with Brent crude at $55.11 bbl. The rig count in the U.S. is falling but turmoil in the Middle East with Saudi airstrikes on Yemen is keeping traders on edge. Kiplinger sees U.S. prices at $60-$65 bbl. by August.

The Federal Reserve Bank is likely to “go slow” with expected interest rate increases. Kiplinger forecasts benchmark 10-year Treasury rates around 2.5% at year end, versus 1.840% on April 3. Safe-money investors still will have to stretch to find satisfactory yields, taking on more risk and perhaps, less liquidity.

Inflation should accelerate to 1.5% for 2015 versus 0.8% for 2014. An investor in a 25% average (not marginal) tax bracket seeking a real yield of 3% over inflation and taxation would have to achieve a gross yield of 6%. With the average 5-year CD rate at 1.49%, safe-money yields continue to erode future purchasing power.

Both the stock and bond markets will remain volatile as investors climb the proverbial “wall of worry.” If you watch daily movements of the market you may wish to talk with your internist about anti-anxiety pills. Better to focus on the strong underlying growth trend in the U.S. economy and the influence of easy money policies abroad and think long-term.

Take that long-desired trip to Europe or Canada where your greenback buys more. While there, don’t watch CNN or Google news on your Smartphone. A week or two without worry...priceless!

Lewis Walker is President of Walker Capital Management, LLC. Certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with Walker Capital Management, LLC. lewisw@theinvestmentcoach.com