Very Cautiously Floating

Stocks are higher at the open due to rumors of progress on the “Fiscal Cliff” talks.  The word is the republican offer includes tax increases on those with an AGI of $1 million or more, but accompanied by $1 trillion in cuts.  The Whitehouse has yet to respond, but the parties are reportedly meeting again right now.  On the economic calendar, the Empire State Manufacturing Index fell to -8.1% versus an estimate of +2.0.  While this would normally have a greater impact on the markets, the Dow is positive by 70 plus points at the moment.  mortgage bonds are slightly lower, but remain above a critical level of support.  We will maintain a cautious floating bias.