The U.S. Equity Market provided a bit of a roller coaster ride the first quarter of 2007. After a steady advance in the fourth quarter and the continuation upward the first couple of months of the year the market saw a significant drop. It quickly recovered some of that drop later in March and closed the quarter at about even year to date. The year to date returns for the following indices are:

                                                    2007 YTD Market Index Performance
                                                    Dow Jones Industrial Average            -0.87%
                                                    S&P 500 Index                                  0.64%
                                                    NASDAQ Composite Index               0.26%
                                                    Lehman Aggregate Bond                     1.50%

Although 2007 began on an optimistic note, investors were reminded of how much global economies and financial markets are interconnected now more than ever, as evidenced by China sparking a worldwide selloff. Although China's selloff may have sparked the pull back in the US Equity Market among others, a number of concerns here at home were most likely the reason behind the risk re-assesment by investors and the pull back. The concerns were the weak economic data, the mortgage lending practices, worries about subprime loans with their potential impact on the economy, increasing oil prices and inflation concerns.

There still remain quite a bit of good news for the economy despite the slowdown. A slowdown is not a recession. The economy should continue to achieve moderate growth with corporate profits remaining at decent levels. The growth should be strong enough to maintain a low unemployment rate and generate enough jobs to keep incomes rising without causing inflation concerns. Without inflation concerns and continued profit growth we should maintain a fairly desirable scenario for stocks. This is particularly true since the Federal Reserve seems to have tempered its bias toward tightening to a more neutral stance. The Federal Reserve made the decision to not change interest rates for the sixth straight time last week. Given the Federal Reserve's shift in stance, we may assume that the recent back-up in inflation represented a blip rather than a change in trend. Given the slowing of the economy that view also seems logical. The stage may be set for a possible reduction in rates for later this year and this would bode well for the equity markets.

In summary, it appears that the economy is in a mid-cycle slowdown and barring any dramatic event a recession remains unlikely. The earnings growth of US companies, while decelerating, will remain positive throughout 2007. In retrospect had February been a positive return month, we would have had the longest consecutive streak of positive monthly returns in the last twenty five years, a rare event. Hence this is why a small correction such as this should not have been unexpected. Corrections are not only inevitable, but are actually healthy and usually represent opportunities for investors.

On behalf of everyone at Ifrah Financial Services, I thank you for your trust, confidence and the opportunity to serve you. Should you have any questions, concerns or comments, please always feel free to contact us.