The Market in the New Year

I was listening to El-Erian of PIMCO, a major money management firm and fixed income investor, on CNBC and he shared that the government will have a major influence on the pricing of assets in the months ahead.  He reminds us that the Treasury has committed to buy $500 billion in mortgage-backed securities in the next 6 to 9-months.  They will literally buy most of the newly produced mortgage assets.  This will keep mortgage rates low.  How the treasury finances this debt will  impact treasury rates.  If they print new money, the dollar will lose value, and treasury rates will remain low.  If they issue more treasuries to finance their purchases, treasury rates will increase.  Stocks?  Stocks will respond to anticipated earnings for companies, with treasury rates serving as an influencing factor, but not the most important factor.  I would expect stocks to continue to be troubled till May or thereabouts.  Time will tell.