David Fry's Daily Market Outlook for Thursday

"It's an Easter present to the British people."

My initial thought is: "Beware of Iranians bearing false gifts." But surely the families of these captives are breathing a sigh of relief. It was good theater while it lasted, and the ending didn't seem to surprise Mr. Market since he was unfazed by the entire affair. Nevertheless we'll be having more drama like this in the weeks and months ahead.

The investment consensus was that oil prices would fall with this outcome [and they did a little], stocks would rally [and they did yesterday in anticipation of this outcome] and gold prices would fall [but they rose inexplicably].

Dallas Fed President Richard Fisher stated today that: "While the subprime damage is largely contained, I do not mean that the market will or should refrain from punishing those who neglected time-proven rules of prudence. Nor am I suggesting that the neglect of prudent practice has not bled into other types of credit--such as the Alt-A market." Okay, I think I understand. No wait, let me read it again, and again and again... If you have the translation email it to me please.

He continued, "Housing markets may feel some short-term pain because 40% of home buyers last year were either subprime or Alt-A. The pain will make it less clear whether housing construction has bottomed and how long the housing downturn may last." Richard Fisher, meet homebuilder D.R. Horton CEO Don Tomnitz, he of "2007 is going to suck."

"The economy will grow more slowly because of the housing market but is strong enough to weather this storm." Whew!

"We're doing our best at the Fed along with other regulators to tread very carefully in dealing with the subprime situation." I'm going to hurl.

The more positive headline for stocks today was that the NASDAQ is back to levels of February 26th before the big shakeout. Will that make everyone happy?

Let's look around other sectors.

Another chapter with Iran has ended but a new one is probably being pondered. It will be something we just have to live with for a long time.

Economic news is poor and Dallas Fed President Fisher's comments weren't inspiring. The price of gasoline won't encourage consumers. However, for investors, momentum is the key since all bad news has been readily eagerly ignored and there's cash to put to work. And speaking of cash the supply of stocks has shrunk and the amount of dollars available for investment has grown.

Earnings season is beginning and, we'll just have to see if the slowdown in the economy spills over to lower earnings and perhaps warnings.

Have a pleasant holiday weekend.

Disclaimer: Among other issues, The ETF Digest maintains long or short positions in: PowerShares DB Energy Fund (DBE), streetTRACKS Gold Trust ETF (GLD), PowerShares DB Precious Metals Fund (DBP), PowerShares DB US Dollar Index Bearish (UDN), iShares Lehman 7-10 Yr Treasury Bond ETF (IEF), streetTRACKS SPDR Homebuilders ETF (XHB), streetTRACKS KBW Bank (KBE), MidCap SPDRs ETF (MDY) Rydex S&P Equal Weight Materials (RTM), Rydex S&P Equal Weight Energy (RYE), Telecom HOLDRS ETF (TTH), iShares MSCI EAFE Index Fund ETF (EFA), iShares MSCI Emerging Markets ETF (EEM), iShares MSCI Austria Index Fund (EWO), iShares MSCI Netherlands (EWN), iShares MSCI South Korea Index Fund ETF (EWY), iShares MSCI Japan Index ETF (EWJ), iShares MSCI Australia Index Fund (EWA) and iShares MSCI Canada Index ETF (EWC).