The U.S. economy has stalled amid a winter freeze but the Federal Reserve is unlikely to act because warmer weather should bring a rebound, leading to higher U.S. stock prices and tighter credit spreads.

Extremely cold weather in the United States, a sell-off in equities and in emerging markets, and large swings in fund flows combined for a volatile start to the year. But none of this will derail the ongoing U.S. economic expansion, and investors should take advantage of this temporary weakness.

We will likely look back on the current turbulence in financial markets as a healthy correction, and an encouraging sign that policymakers are allowing markets to self-correct in a way not seen since before 2008.

It has been a hard start to the year, especially for emerging markets, but the latest dislocation is a healthy part of the cycle and the risk-on trade remains intact.

The focus at Davos has shifted to two new topics: growing income inequality as a risk to economic growth and social stability and the emergence of Africa as an economic force. Neither of these is a big surprise as neither is new. But the fact that these are the primary focus this year tells us that these topics will likely become more prominent in 2014.

This is likely to be another good year for risk-on investing, as an improving economic outlook supports stocks and bonds in an environment marked by less volatility than 2013.

Improving U.S. macroeconomic conditions should spur additional investor demand for high-yield bonds and bank loans, particularly with defaults exceptionally low. Still, investors should monitor trends pointing to an erosion of safety in leveraged credit.

Last January, the global economy faced myriad headwinds, choppiness lay ahead, and we expected plenty of volatility. Nevertheless, I said then that risk assets were the best choice for investors. Now, the headwinds of 2013 have largely dissipated, and the outlook is benign for risk assets for the first three to six months of 2014, if not longer.

What will Santa bring for Christmas...does he exist at all? Yes he does, his name is Bernanke and he has a stock market rally to share and good holiday cheer for all!

The Fed surprised many investors by announcing it will taper in January, but made clear that interest rates will remain near the zero-bound as forward guidance becomes its primary policy tool.

Financial markets have been discounting the end of tapering for months, and whether it happens in December or March is less important than the reality that the U.S. economy is recovering amid a global synchronous expansion.

Volatility induced by headline events has created attractive price dislocations in the municipal bond market, which may now present the best buying opportunity for investors since late 2010.

Major developed economies are all contributing to global economic growth, and this improving fundamental picture, coupled with ongoing monetary accommodation, bode well for risk assets.

As this bull market climbs its "wall of worry," we can see its underlying strength. Valuation concerns and the risk of a major correction appear overblown, as we should see a continued rebound in economic fundamentals over the coming months.

The Federal Reserve has started to highlight forward guidance as a way to keep interest rates lower for longer and get the exhausted hamster off the treadmill of quantitative easing. We still think tapering remains farther off than most investors expect.

Both bond and equity markets are well-positioned, regardless of whether the U.S. Federal Reserve tapers its asset purchase program.

There remains significant upside for risk assets, but in this liquidity-driven market there is also an increasing risk of a melt-up such as the one that preceded the bursting of the tech bubble in early 2000.

With the U.S. economic expansion entering its fifth year and the global economic picture improving, it appears equities in Europe and Asia can still rise.

It would be easy to think those with a thirst for exploration were born too late - to assume that humanity has already reached every corner of the earth there is to discover. But one region - the Arctic - still contains uncharted mysteries.

Ultra loose U.S. monetary policy continues pushing asset values higher at home and abroad. Seasonal factors should also provide a tailwind and lift asset prices across nearly every investment class.

With the partial government shutdown and Washington gridlock behind us for now, interest rates should continue declining and conditions are pointing to a period of renewed strength across asset classes.

The U.S. Federal Reserves decision in September to delay at least for now any reduction in its asset purchases drove U.S. Treasury rates down materially from the highs seen over the summer, easing concerns about the impact of higher rates on economic growth. Now as we start the fourth quarter, the below-investment grade investment outlook appears positive, and more positive for high yield bonds than bank loans.

Fundamental factors underlying the corporate sector continue to underscore our constructive stance on leveraged credit, however, investors should prepare for heightened Q4 volatility amid shifting technical dynamics in the bank loan market.

Volatility from the government shutdown and other political developments in Washington D.C. will likely continue to rise. Despite this, the reduction in output from this will be short-term, and investors still have several attractive options for deploying capital across asset classes in the United States and globally.

While U.S. stocks are increasingly due for a consolidation, the outlook for global equities is improving. Now appears to be a good time for investors to increase allocations toward Asia and Europe.

The Federal Reserves decision not to taper quantitative easing telegraphed a mixed signal to markets about policy guidance while tempering forward economic growth expectations. Dramatically lower interest rates can be expected.

The yield on the benchmark 10-year U.S. Treasury bond has risen by more than 84 percent from May to early September, one of the most violent and rapid increases on record. This spike has caused severe convulsions in the bond market, leading many investors to wonder how long the torment can last.

Higher interest rates continue to negatively affect the real economy, increasing the susceptibility of risk assets to downside risk.

Despite disappointing economic data, there continues to be widespread expectations of a period of stronger economic growth just ahead. This growth mirage draws thirsty investors and increases the likelihood that interest rates will continue rising over the near-term.

The slowdown in housing due to higher mortgage rates is becoming more evident in the data for that market. This comes during a time when the Fed is making a crucial decision about tapering quantitative easing, which is causing market uncertainty to rise further.

The release of the July Federal Open Market Committee meeting minutes today and the Jackson Hole Economic Policy Symposium starting tomorrow are likely to dominate near-term activity in financial markets. Despite mixed economic data, it appears increasingly likely that some form of tapering will be announced at the FOMCs September meeting.

Chinas elevated and rising debt levels appear to be one of the largest risks to the global economy today. Although it is difficult to gauge when the risks in that country could manifest as a crisis, investors should act with the knowledge that the margin of safety in the global investment environment continues to decrease.

My long-term view of U.S. equities remains bullish, but a number of indicators, as well as near-term macro challenges, point to a pause in the run-up of that asset class.

In the search for yield, ABS offers an opportunity to generate higher returns through rigorous analysis, unaccompanied by additional credit or interest-rate risk.

The value of the Feds portfolio has fallen by about $192 billion as a result of the rise in interest rates over the past quarter. Further losses from rising interest rates could compromise the Feds ability to engage in monetary tightening should market conditions warrant such action.

Despite blockbuster new home sales, higher interest rates have put downward pressure on housing activity. This is highly worrisome given the importance of housing to the health of the U.S. economy.

The longer-term outlook for the U.S. stock market remains favorable, but moves in the NYSE advance/decline line suggest caution in the weeks and months ahead.

Tensions in Asia are rising, as China attempts to move toward a more market driven economy. This, combined with the ongoing ultra loose monetary conditions in Japan, has elevated the threat of a financial crisis in the region between now and the end of 2013.

While rapidly deteriorating credit quality and excessive market leverage were the chief culprits behind the end of the previous credit rally in 2007, neither factor is currently a significant concern in the leveraged credit market. Interest-rate risk, specifically the markets uncertainty regarding future monetary policy, precipitated the recent market sell-off and will likely continue to shape the performance of high yield bonds and bank loans in the near term.

There are striking parallels between the dramatic recent sell-off in U.S. Treasuries and the Great Bond Crash of 1994. But the summer of volatility now facing financial markets is no doomsday scenario. Instead, it puts the U.S. Federal Reserve in a bind. Higher interest rates will reduce housing affordability, which is especially troublesome since housing is the primary locomotive of U.S. economic growth.

Uncertainty over the Federal Reserves timeline for tapering quantitative easing has resulted in increased volatility in fixed income markets. While the coming months could see the 10-year Treasury yield climb as high as 3.5 percent, the resulting economic slowdown will keep rates subdued in the medium-term.

The recent bond market collapse is reminiscent of the Great Crash of 1994. Further pressure on the economy due to rising interest rates could cause the Fed to revisit its timetable for QE.

Rising interest rates are beginning to put pressure on the recovery in the housing market, which will affect economic output. This reduces the likelihood that the Fed will taper QE in 2013, and could even lead it to signal a possible expansion or extension of the current policies.

Hyman Minskys scholarship holds valuable lessons for the current dynamic in the economy. The Fed, via QE, continues to induce speculative buying in the Treasury market, which is having the effect of destabilizing a number of asset classes.

Market volatility is rising as the Fed continues with its asset purchase program. The economy also appears increasingly vulnerable to a rise in interest rates, which would have an adverse effect on housing in particular.

Ongoing monetary stimulus is leading to heightened volatility, and the bull market which has been in place since 2009 is becoming overextended. The recent string of surprise downside moves in markets may be the canary in the coal mine for global investors.

The pace of policy reforms is accelerating and economic recovery appears to be on the horizon for the European Union.

Quantitative easing has benefited from global macro events and appears likely to continue for the rest of the year. Markets, though, will continue to anticipate how the current policies will eventually be unwound.

The devaluation of the Japanese yen may lead EU policymakers to implement measures that will help the economic situation in the single currency zone.

Emerging markets still provide excellent opportunities for outperformance in equities, with Malaysia, Indonesia, the Philippines and Singapore being among the best positioned for the decade ahead.