Today, the Federal Reserve was once again clear in their minutes on where they stand on monetary policy.

“The Committee reiterated its expectation that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”

We continue to expect the Fed will indicate tightening when they stop rolling over their US Treasuries and their mortgage-backed securities. We have always felt, the Fed would not tighten in 2015 and are now comfortable saying they will not tighten in 2016 unless the US economy becomes overheated. If we listen carefully to the Fed, their expectation of inflation reaching their longer-term objective of 2%, is not until 2018! If they are right, the Fed will be tasked in keeping interest rates low until the US and Global economy can re-inflate. One must remember, a strong dollar is disinflationary and therefore any tightening reverses the course of inflation and economic growth. Therefore, moving towards the end of the year, we expect both global bond and equity markets to rally as the European Central Bank eases further in early December and as expectations of Fed tightening decreases.

On Wednesday, November 18 on the close, we executed our synthetic options on the DJI and S&P by buying both at an equivalent index of 17,740 and 2,084 respectfully. We are long double positions in both the DJI and S&P and are 100% invested.

Modeled performance since inception, May 2012, net of all fees is +258.56%
In 2012 modeled performance (7 ½ mo.) net of all fees was +12.46% with a 10% Hurdle rate
In 2013, modeled performance net of all fees was +19.73% with a 10% Hurdle rate
In 2014, modeled performance net of all fees was +56.42% with a 10% Hurdle rate
In 2015, modeled performance net of all fees is 73.75% with an 8% Hurdle rate