Obviously I agree with my friend Stephanie, which is why my firm has been recommending the scale buying of distressed debt situations like BlackRock MuniHoldings Insured (MUE) and Nuveen Insured Dividend Advantage (NVG), both of which sell at discounts to their net asset value and have over 6% tax free yields. We also have been recommending Lord Abbett Bond Debenture Fund (LBNDX) with a near 9% yield. Moreover, even though we have avoided the financial complex for years, for those wanting exposure to said complex our vehicle of choice remains the iShares S&P U.S. Preferred Shares (PFF), which is yielding over 10% and has a 78% exposure to the financial complex’s preferred shares (see the attendant chart). Additionally, during the past few weeks we have added the iShares MSCI Japan (EWJ) and iShares FTSE China (FXI) to the ETF portfolio.



The call for this week: The world’s stock markets are well off their “lows,” risk appetites are slowly returning, and the central banks are aggressively easing. Indeed, as MaroStrategy’s Bob Parenteau notes, "The prime monetary policy operation becomes the Fed’s ability to use its infinitely expandable balance sheet to purchase longer maturity Treasuries, GSE debt, mortgage backed securities, and in the extreme, even equities and corporate bonds with the objective of getting private market interest rates down and asset prices up." My firm continues to think the Fed will be successful. Happy New Year everybody.