The markets turned in another strong month in spite of some big, day-long profit-taking sessions, which were fueled mostly by reactions to earnings reports. On average more companies have been able to meet or exceed analysts' expectations, but some of their guidance for the next couple of quarters has been negative.

With the indices hanging around record highs, we're more-likely to take profits than we are to chase flyers. There are opportunities in individual stocks, but not those that are soaring to new highs. Now is when we look for value and dividend yield in names the rally has ignored. They may move higher if the Bull-market run continues, they are not as likely to sell off as badly in a now-overdue correction, and they pay us nicely while we wait for it.

Even though there will be revisions, I'm going to spend a little more time than usual on the just-released GDP numbers for the third-quarter, which jumped to 2.8% annualized, from 2.0% last quarter. This was mostly due to a larger-than-expected increase in inventory accumulation, which added 0.8% points to the headline figure. If we strip out inventories and external trade, the growth rate of final sales to domestic purchasers, which is a better gauge of underlying economic strength, actually slowed to 1.7% in the third quarter, from 2.1% in the second.

Businesses building inventories (stocking up) for a big year-end or holiday spending season as preliminary consumer confidence readings slip a bit may be disappointed. But gas prices couldn't be falling at a better time, and may be why some retailers are expecting a big Christmas spending season, even though Thanksgiving is some six days later than it was last year, shortening the "official" shopping season.

Consumption growth slowed to 1.5%, from 1.8%, while business investment increased by only 1.4%, way down from a 4.7% gain in the previous quarter. Residential investment increased by a strong 14.6%, but most of the latest monthly data on home sales and housing starts suggests that housing will provide a smaller boost to overall GDP growth for the next couple of quarters.

Total government consumption increased by 0.2%. This was heavily influenced by a 1.5% rebound in State and local government spending, thanks to rebounds in tax revenues, which, in turn allows those State and local governments, who are forced to run balanced budgets, to rehire some of the workers they let go in the aftermath of the recession.

I'm still not convinced government consumption (public spending) should be included in GDP since the money they're spending is taken from present or future taxpayers (private spenders) to begin with, but I'll deal with the numbers as they're given and strip out what I can in an attempt to make sense of them.

October's payrolls were a nice surprise, on the surface. Analysts expected 125,000 jobs to be created, and to see the 17-day government shutdown have a huge, negative influence. The Department of Labor announced 204,000 jobs created in October and upward revisions to August and September totaling 60,000. The unemployment rate ticked higher to 7.3% while a higher-than-average number of workers left the workforce.

Something doesn't square up there. More jobs and fewer workers looking for them should have caused a drop in the unemployment rate. Maybe next month's revisions will provide some explanation, but none can be found in this month's report.

The establishment survey was not impacted by the government furloughs because those employees received back pay when they returned, meaning they were counted as employed. Looking deeper into those jobs created, more than half of them were entry-level, minimum-wage jobs. There is still a lot of room for improvement in the employment area.

The president has revived his campaign for billions of federal dollars to be spent on infrastructure projects to create "thousands" of construction jobs. If we use federal money to put thousands of people back to work, might we assume that at least some of them could come off of other, federally-funded assistance programs, like food stamps, which would justify an offsetting spending cut in that area?

From a pure, accounting point of view, the answer would be, logically, yes, but "liberal" politicians who use handouts to secure reelection never want to be held responsible for any cuts in government spending. Perhaps more-importantly, "conservative" politicians who whip up support by vilifying the actions of their opponents in order to secure their own reelections absolutely depend on it. I may have just stumbled upon a deeper understanding of the problem than I wanted, or intended to right there.

I also stumbled upon a great article called: "Saul Alinsky: Founder of the Tea Party?" by Doug French. It's only a couple of pages. If you'd like me to email a copy to you, just reply and ask.

Thanks to the sequestration cuts, our government is currently not spending more than it is taking in, but we are still at a net deficit of nearly $700 billion for the year, and the national debt, at over $17 trillion continues to climb. We are now spending more on interest on that debt than we are in federal employee pensions. I'm pretty sure we could find a better use for $262 trillion dollars than just throwing it away on debt, but relying on the resolve of our leaders to do something about it is naïve.

Our government continues dumping billions each month into the bond market while saying they're fighting for the poor and middle class while simultaneously complaining that the rich are the only ones getting richer. They will continue to do so until the system breaks because they can, and because most of them will suffer no consequences for doing so. The worst they'll get is a share in the misery we allowed them to create.

QE as a strategy to fix the economy and help the poor and middle class is a cruel joke. Who makes money in the bond markets? Is it the poor and middle class or the ultra-wealthy? How does throwing borrowed billions at huge banks, allowing them to offload bad and underperforming debt at taxpayer expense, increasing their margins and private investment accounts while not making more loans help the poor and middle class?

The answer swirls amidst the darkest and most cynical thoughts I have. I'll answer indirectly with another question. Who contributes more to political campaign coffers, the struggling poor and middle class or the ultra-wealthy? While you're thinking about that, guess who else keeps getting richer?

So...will the Fed taper or not? Janet Yellen's confirmation hearings before the senate will start this week. As the new Fed Chair, she would surprise few if she moved the goalposts again by setting a lower, target unemployment rate as a trigger for tapering.

Even if the Fed announces an end to, or reduction in QE, politicians will find other ways to continue throwing money into the system. They can't stop because that would mean the end of them. The European Central Bank's surprise quarter-point rate cut is all the incentive they need to print more money. Relaxed monetary policy in the European Union will weaken the Euro vs. the Dollar. Good for people spending dollars overseas and net importers, but bad for US-based companies that rely on exports to the EU.

Unfortunately, all this uncertainty over QE still means the bond market is a risky place to be. The headlines say "Treasury Yields Jump on Brighter Economic Outlook." Sounds great, doesn't it? Unfortunately, when yields jump, prices fall and if you own treasuries so does your market value. It also means our public debt is more-expensive because we're paying more in interest. We'll continue to see any hint of government tightening or rising rates lead to selloffs in bonds and bond funds until a clear plan for QE is outlined.