Weekly Update: June 17, 2013

Anticipating the Fed's Next Move

Following a very volatile week, in which we saw the major U.S. averages hold key support, the global equity markets are quite firm this morning, and it appears the market gyrations that have highlighted the last few weeks of trading will continue to be present until the next update from the FOMC. Investors haven't been more confused about the Fed's policy direction than they are currently, but the strong opening for stocks today represents a view that the Fed won't depart from their current stance of fostering further economic growth through quantitative easing.

The macro-data over the weekend was light and none of them had any catalytic impact on the markets. Japanese markets, which have swooned of late, opened the day higher and managed to sustain that momentum, advancing into the close. The Bank of Japan helped their own Open Market operations, buying back over JPY 600 billion in government debt. The Nikkei was also helped by a softer yen. Stability in the Japanese bond market is key to avoiding systemic chaos in other credit markets and investors should follow developments in that market closely, being that it's the third largest economy in the world.

In this week's issue of Cash Machine, I'll talk more about the conditions in overseas markets and why I believe the Fed will stay its course, I'll update and review some of our portfolio holdings and I'll answer some of your questions in this week's Ask Bryan.

Monthly Issue: June 10, 2013

Summer of Love Shaping up for High Yield

Over the weekend, the business headlines have been net positive, building on the late week rally. The S&P 500 appreciably extended Thursday's recovery rally off of support in opening action with the widely followed jobs report underpinning. Payroll data rolled in better than expected with non-farm payrolls coming in at 175,000 versus estimates of 159,000 while the unemployment rate ticked higher.

Participants appeared to focus on positive payrolls with the higher rate, arguing that the Fed will maintain its policy course. The indices extended the early surge into late morning trading with the S&P reaching the 1640-1642 resistance zone. Choppy action in the upper end of the range dominated deep into the afternoon before some last minute upticks saw the indices edge to minor new daily highs.

In today's monthly issue of Cash Machine, I'll explain what Friday's recovery rally will mean for our positions and the broad market, I'll take a closer look at the bond market, attempt to predict where it is heading and I'll answer some of your questions in the latest edition of Ask Bryan.

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