With the publication over the weekend of a story by John Hilsenrath discussing the Fed's plans for exiting Quantitative Easing, it is clear that the time is rapidly approaching when the Fed will begin scaling back its monthly purchases of Treasuries and MBS. Once new purchases cease, the next step will be for the Fed to reduce its holdings of Treasuries and MBS, and at some point in this process, short-term interest rates will almost certainly begin to rise. The only thing newsworthy about this is that the unwinding of QE might start a bit earlier than the market has been expecting. In fact, the Fed could well start scaling back its purchases within a few months. So how scary is this?

It's very scary if you believe that the Fed's aggressive expansion of its balance sheet has been the main force sustaining and powering the recovery. Without continuing

Recently I heard a CNBC contributor point out that 92% of the time when the stock market starts a year with a positive January and first quarter, it ends the year positive.

So what about the 8%, and is there a potential lesson hidden in history? I quickly would point investors to 1946. In that year, the market was riding the euphoria of the end of WWII, troops were returning to home base and the country was making a structural adjustment from a war based economy to a peacetime industrial complex. During his 1946 State of the Union Address, Truman outlined the country's plan to address the large U.S. debt that had grown to $230B, 120% of GDP. Essentially it involved trading "guns for butter" as my political science professor pointed out long ago - and the budget curbed government spending growth and returned the country to a balanced budget.

What's New: I've updated the charts below through Thursday's close. The S&P 500 is fractionally off its all-time high set on April 2nd.The yield on the 10-year note closed today at 1.78%, which is the lowest daily close of 2013, matching the close on December 31st of last year.

The latest Freddie Mac Weekly Primary Mortgage Market Survey puts the 30-year fixed at 3.54%, down from its interim high of 3.63% in mid-March but 23 basis points above its historic low of 3.31%, which dates from the third week in November of last year.

Here is a snapshot of selected yields and the 30-year fixed mortgage starting shortly before the Fed announced Operation Twist.

For a eye-opening context on the 30-year fixed, here is the complete Freddie Mac survey data from the Fed's repository. Many first-wave boomers (my household included) were buying homes in the early