Five Things You Need to Know

My favorite part of Minyanville is Kevin Depew’s Five Things You Need to Know.

His take on yesterday’s Fed meeting is a perfect example why 5 Things has become a daily read for me:

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Fed Got a Brand New Bag

The Federal Reserve Open Market Committee met yesterday and decided to keep its target for the federal
funds rate unchanged at 5.25%. 

    • The decision to stand pat on the fed funds target rat was widely expected,
    so the only drama surrounded the release of the FOMC statement. 

    • Two things stand out.  The first is the progression of the Fed’s view of the
    housing market. 

    • Housing first made an appearance in the FOMC statement accompanying the May 10 meeting: "The Committee sees growth as
    likely to moderate to a more sustainable pace, partly reflecting a
    gradual cooling of the housing market
    …"

    • The Fed’s view that the housing market was "gradually cooling" apparently
    remained in place until the Sep. 20 meeting when the accompanying statement
    said: "The moderation in economic growth appears to be continuing,
    partly reflecting a cooling of the housing market."

    • Now, the FOMC statement notes the following:   "Economic
    growth has slowed over the course of the year, partly reflecting a
    substantial cooling of the housing market
    .
    "

    • In the course of seven months the housing market has gone from gradual
    cooling to cooling to substantial cooling. 

    • The second thing to stand out is the addition of the word "mixed" to
    describe the economy. "Although recent indicators have been
    mixed
    , the economy seems likely to expand at a moderate pace on balance
    over coming quarters."

    • Looks like the Fed got a brand new bag… and it’s mixed.

Great stuff kevin — Thanks!

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Source:
Fed Got a Brand New Bag
Kevin Depew
Five Things You Need to Know:
Minyanville Dec 13, 2006 10:31 am
http://www.minyanville.com/articles/index.php?a=11777

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