FOMC - Nothing New

Today's FOMC decision pretty much held to the status quo.

Interest rates will remain low. As far as I can see, this will be the case for the next few quarters. We're a long way from any real economic recovery and low interest rates is one way to stimulate or at least help maintain some sort of activity. What's telling is that bank CD rates are pitiful not to mention what measly rate they're paying for your savings account. Awful. I had locked some money into CD's around this time last year at a 1 year term for a rate of over 4% - now, competitive 1-year CD's are barely fetching 2%. Needless to say, I will not be renewing. Moreover, word on the street is that you can't even take advantage of historically low rates because banks still are not lending.

The Fed continues to sop up more residential mortgages. And, it's the ugly kind they're buying - the kind that banks want to rid. Whatever moral hazard we were concerned about is far away in outer space now. Banks continue to dump and trim off excess while we eat their waste and get sloppy in the act. I guess, in theory, we (and I mean the Fed) has an infinite life and can take it's sweet time to get back into shape. No doubt, Gen X, Y and whatever Letter is after that will pay the price. Sad.

The stock market is pulling traders back in. Of course, it's pulling the dumb money now but when Mr. Market goes up 60% in 6 months, how can you resist? It'll keep going up, no? My answer...I'm mostly in cash. I rather sit this one out because I know that real people are still suffering and will be suffering for a long time. The euphoria of yesteryear is very real but tomorrow's struggles are getting clearer and clearer. We may not see the March lows again, but it doesn't mean we steadily go up from here. I rather spend my time and money focusing on better opportunities than speculating at this point.