Yes, the Federal Open Market Committee held another one of its much-anticipated interest-rate meetings Tuesday. And after Greenspan surprised no one by doing nothing for the third straight meeting, the markets responded pretty much in kind.
Well, almost. There was hardly any suspense at all this time about the actual decision. This is election time, when the stringently apolitical Fed just doesn't want to get involved unless it absolutely has to, and after last week's twin interventions on behalf of both the euro and oil prices, this was not the time Greenspan wanted to roil the markets in any way. But there are clouds on the horizon, and when Greenspan mentioned one of them rising oil prices that could exert inflationary pressures investors had a little sell-off, stopped, and then sold again until the modest morning rally had melted away. (Some moony-eyed investors were betting that Greensapn would cut rates; others suddenly got scared about oil prices.)
So the Fed's biggest news of the day was that its announcement came in about two minutes earlier than usual. The market will go on worrying about earnings and trying to figure out whether it wants to finally mount a real rally after a dismal year for the Street. And everybody maybe even the voters will be a little on edge until this whole election thing blows over. Wall Street, more than ever, is confused about this election. Gore is attracting support unusual for a Democrat as the techie representing the eight-year economic boom, while Bush's tax cut worries some investors who fear for the government's fiscal discipline. Yet Bush is still the pro-Big Business, anti-Big Government Republican in this traditionally GOP enclave, and he also happens to be Microsoft's best hope.
Will oil prices, which can act like a tax and dampen consumer spending, continue to do the Fed's soft-landing work for it? Or will they smother the boom? Will corporate earnings pick up? Will the euro ever recover? As the Fed chairman made clear with those ever-so-slightly-hawkish comments about energy prices, Uncle Alan may be on the sidelines but he's watching. And he'll see us in December.