Bruce, here's briefing.com (reassuring) on fed meeting:
Federal Reserve : We now have all the pieces the Fed policy puzzle that we're going to get ahead of Tuesday's meeting. Unfortunately, even with all of those pieces, the puzzle is only half finished. The market is still on the fence regarding the likelihood of a quarter point rate hike on Tuesday. The Oct 28 Greenspan speech and the Employment Report shifted expectations toward no change in rates, then the PPI report swung opinion back in favor, and now today's Productivity report has once again reduced tightening expectations. The fed funds futures contract places the probability of a tightening at about 60%. While this is quite clearly the toughest Fed policy call in many years, we still lean toward a steady policy decision on Tuesday. Note that this forecast has little to do with economic forecasts and everything to do with our attempts at mind-reading. That is what short-term policy forecasts are all about -- getting into Greenspan's head (there's a movie in this somewhere -- Being Alan Greenspan?). No one has yet found the portal into his brain, but we have a guess about what you might find there. For the past five years, if there is one word that describes Greenspan's modus operandi, it's predictable. He seldom surprises the market at an FOMC meeting. If the Fed is going to make a move, he usually telegraphs the move in a speech leading up to the meeting. But in his last substantive speech, he not only failed to telegraph a move, he actually led the market in the other direction. At the time of that speech on October 28, it seems quite likely that he did not expect to raise rates on November 16. Of course much has transpired since then, making it possible that he has changed his mind. But the final significant piece of information was today's Productivity report, and the huge 4.2% Q3 increase alongside a decelerating unit labor cost growth rate certainly gives the Fed reason justification to hold steady. It's as close to a coin toss as you will get with the Fed, but we'll opt for no change in policy. - GJ
The problem for me is that Tuesday a.m. I have to drive up to Amherst and spent two days interviewing my favorite scientist of all time. Guess I'll be on the cellphone. It may be another historic week |
