Fed's Out; See You in November

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If Alan Greenspan were running for president this year, his slogan would be "pessimism with a purpose." (He'd also probably win, but that's another story.) The Fed delivered on expectations both monetary and spiritual Tuesday afternoon, declining to raise or cut interest rates from their current 6.5 percent level but also telegraphing the usual warning to Wall Street: Don't get too excited. We're watching.

It wasn't even hard to translate. The Fed said recent data has shown "that demand is moderating toward a pace closer to the rate of growth of the economy's potential to produce." The economy is slowing to a sustainable pace. "Against the background of its long-term goals of price stability and sustainable economic growth and of the information currently available, the Committee believes (as far as we can tell) the risks continue to be weighted mainly toward conditions that may generate heightened inflation pressures in the foreseeable future," the statement said. Labor markets still tight. Wealth effect from market rally still dangerous. Never, ever take the Fed for granted.

Markets did just that, bubbling up a bit on the news but generally acting like they weren't surprised a bit at the idea that interest rates would be stuck at 6.5 percent for the duration. The news had been discounted, and excitement is low — August has been a pretty solid month for all the indexes, and the week before Labor Day is generally a slow one as investors brace for September.

The Fed looks to be done for the year, or at least until after the election, and where the market goes from here is no longer up to Greenspan. Investors could get back to focusing on earnings reports and profit forecasts, although mental knots over news like that produced a very dispirited July for NASDAQ. Or the next object of suspense could be the Time Warner-AOL merger decision, due in the fall from the FCC, which could set the regulatory climate for at least the next year (Time Warner, of course, is parent of this site). Or even the election, as Monday's damage-control dance continues with Gore sounding the battle cry and Lieberman whispering that the ticket will be pro-business again by October, not to worry. The way this matchup is shaping up — call it Carter-Reagan with a prosperity twist — we could get market ping-pong all fall. This market, it seems, will always find something to fret about.

Hot tip: If Rudy wins "Survivor," sell.