25 Oct Cautiously Floating
Markets woke up to what appeared to be a positive for investors as Japan is said to be joining in the global monetary stimulus strategy. Initial Jobless Claims also came in below expectations and Durable Goods Orders for September were better than expected. All this good news pushed the Dow higher by 80 points initially, but is now 20 points in the negative. After digesting yesterday’s Fed comments, it appears that the game plan remains to be print money, buy bonds and keep the Fed Funds Rate low until the economy turns around. The Fed also gave an expected date of 2015. That is all subject to certain aspects staying in check… aka inflation. It’s hard to see the markets move with any conviction with the election so close. Especially, given the drastically different philosophies that the country could move towards. The world looks like the classic example of “Throwing money at the problem and hoping to fix it,” but really just dealing with the symptom and not the source of the issue. mortgage bonds are clinging to support and are at the lowest level since QE3 started once again. We will stick with a cautious floating bias for new transactions.