The Federal Reserve's latest strategy to kick-start the economy has been dubbed “Operation Twist” by pundits, but it's causing many people to shout. When the Fed announced its intentions to purchase $400 billion in long-term bonds on Wednesday, the Dow Jones Industrial Average immediately dropped 250 points. Then on Thursday, the Dow dropped 400 points more. In short, financial markets aren't impressed.

We aren't impressed either. The real issue is general uncertainty in too many sectors of the economy, and, ironically, certainty with interest rates. In fact, we think that the promise of low interest rates extending far into the future will do more harm than good, because now even more people are motivated to move to the sidelines to wait for mortgage rates to fall further still.

We expect to see a pick up in refinance activity, and we look forward to the business, but we would like to see more purchase activity. We remain convinced that the prospect of rising, not falling, rates and more accommodating underwriting standard are what's needed to stimulate purchase activity today.

Information courtesy of Jessica Regan.