Cassandra Toroian


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In general, the underlying fundamentals of US companies are solid and a few ways to measure companies and their respective management teams is through their use of capital. Then consider that the US capital markets have been influenced by Washington DC over the last several years and now there are signs of their exit which is a long term positive for business and capital markets, in my view.

We have made progress since the government shutdown in October 2013 which was less than 6 months ago. Seems longer! I would posture that US business leaders have more clarity presently then 6 months ago and even more than a year ago given the following items that have occurred.

The Federal Reserve switched leadership and is successfully tapering its massive quantitative easing program.
In D.C., the adults came back from holiday and actually passed a budget without major drama.

Talks of the continued taper moved a step further to a potential hike in interest rates which sent the markets south at the beginning of the week.  From our perspective, the steady unwinding of the taper should continue through this year and yes, at some point in time the Fed will increase the Fed-Funds rate.  Will it be in 2015 or 2016?  It is truly too soon to know but prudent to begin considering such a tightening. 

Fannie Mae posted net income of $84 billion in 2013 and is expected to pay the US Treasury its fourth quarter dividend of $7.4 billion in March which will bring total dividends paid to $121.1 billion.  Both Fannie and Freddie are in conservatorship and paid the US Treasury $192.4 billion which is above the $189.5 billion they received.  There is a battle over the profits as the companies were …

The government shutdown initially sent the markets modestly higher, but dipped lower by midweek when President Obama mentioned in an interview that Wall Street should be concerned.  Envision the car chase through our capitol and the abrupt lock-down of our politicians last week.  For a moment, I thought it was a hoax, a desperate attempt to get our politicians to act, to stop the gridlock, to get nearly 2 million people back to work, to address the debt ceiling, and ultimately to begin behaving like adults.  Where have the adults gone?  Can you imagine what Wall Street would do to a company that acted in this manner? Can you imagine what their quarterly 10Q filing would look like for 12/31/13?

Amidst the public grandstanding by our elected politicians, there has been mention of a “clean” bill of which the republicans are “against” and the democrats are “for”.  From my research, the …

For a while the market focused on earnings, then M&A but in the background, since approximately May of this year there has been the lingering question as to when the Federal Reserve will taper or ease its quantitative bond buying program of $85 billion per month.  This coming Tuesday and Wednesday, at the Fed meeting, many expect some sort of a retreat by perhaps $10 billion or so.

The Dow Jones jumped by 3.04% to 15,376.06, the NASDAQ rose 1.70% to 3,722.18, and the S&P 500 increased by 1.98% to 1,687.99.  The SNL Bank Index advanced by 1.15% and the Thrift Index was up by 1.38%. The global market indices were mostly higher for the week. In Europe, the DAX and the CAC 40 increased by 2.82% and 1.61%, respectively, while the FTSE rose by 0.56%.

Year-to-date, the Dow Jones rose 17.34%, the NASDAQ jumped 23.27%, and the S&P 500 advanced 18.36%. …

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