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Registered Investment Adviser Caleb Lawrence 

Another day of trade absent any real volatility sends the major averages into the final hour with miniscule gains. The California Manufacturing Survey jumped to 64.9 in the 4th quarter on broad based strength to reach a more than 2-year high.

Mortgage activity slipped 2.1% last week marking a 4th consecutive decline as per the Mortgage Bankers Association. Purchase apps fell .1% while refis dropped 4.2%. The 30-year contract rate for a jumbo loan increased fractionally to 4.11%.

The usual dissection of the Federal Open Market Committee meeting minutes on monetary policy and interest rates shows the Fed still hedging on exactly when it will begin officially tapering its bloated balance sheet. The debate on inflation continues, or more specifically the lack of. Once again, the Fed blamed idiosyncratic or temporary factors for the lack of inflation. Essentially more of the same, say much and mean little with the Fed promising once again to continue its go slow cautious approach to raising interest rates and normalizing economic policy. Perhaps the Fed should make some anhedonic adjustments to the prices of education, air travel and healthcare if it wants “higher” official inflation figures as the enjoyment, utilization and value of these items has suffered of late. Also of note with respect to normalizing monetary and interest rate policy. As goes the Fed so must the world follow or global capital flows risk becoming dangerously skewed in favor of locations with higher rates, lower risk premiums or both.

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