Just checking in from vacation. Yesterday's Fed statement was not surprising, unfortunately. The Fed's language was decidedly more cautious than prior meetings. Thomas Hoenig was the only dissenter to keeping rates ow for an extended period of time. Some day he will be correct, but not now. Not as long as the rest of the world is more dysfunctional than us. Not as long as housing (and the rest of the economy) is stimulus driven. No folks, the malaise continues. I think we will be fortunate to see a Fed Funds rate hike as soon as early 2011.
What about the positive reaction to the Fed statement by the equity markets? The equity markets were happy to hear the Fed will keep rates low which should keep corporate profits respectable, even though employment will be disappointing. Also, today's jobless claims data was nothing to write home about.
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