Tim Duy worries that some FOMC members are overestimating the inflation risk.

Arnold Kling proposes a mackerel theory of value.

The discussion at Cato of monetary policy continues.

While the Lehman Brothers (LEH) and AIG (AIG) crisis currently affecting Wall Street will be front and center today, driving stock market action, we also have an active economic calendar in store. At 8:30 AM, we will be getting the Consumer Price Index Numbers for August. 

Additionally, the Federal Open Market Committee (the FOMC is the monetary policy-making group of the Federal Reserve.) will be meeting today.

After their last meeting, it was pretty much a foregone conclusion that they would not be lowering rates further this year. If anything, it was more likely that they would raise rates. We’ve never understood this, as the economy is suffering. But because oil and other commodity prices have been strong of late, some at the Federal Reserve felt a hawkish stance was neccessary.

At the last meeting when they voted to keep rates unchanged, Dallas Fed President Richard Fisher, dissented and instead voted to raise rates. Now that

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At "A Dash" we have some strong viewpoints about the Fed.  Prior articles have covered this point, including the following key points: Most of the big-time Street critics of the Fed (including plenty of those who are really smart, great traders, and offer timely advice) are overplaying their hand with Fed criticism. Wall Street guys need to learn that intelligent people can look at the same data and reach different conclusions.  The fact that one has a lot of money to manage or gets a big paycheck does not imply omniscience. People confuse what they believe the Fed should do with what they expect the Fed to do.  There is more money to be made by predicting the Fed, than by pontificating about their errors. Disparaging the actual credentials of others does not increase one's status.  The Internet and mass media create a playing ...

Volume was lighter across the board as many on Wall Street are taking vacations. Summer months, June through August tend be on the light side for volume. The Nasdaq showing once again it is the leader of this market. Big cap indexes like the S&P 500 and Dow Jones Industrials continue to lag behind the tech laden index. Price action on the Nasdaq continues to look higher as Tuesday’s trading day will be day #4 of our most recent attempted rally. What this market is showing us, it may be a bit difficult to pull off. However, lots of call buyers in GS for their earnings release which could spark a powerful rally. As the nations mid-section dries out Corn has put in, for the time being a short term top. Corn is heavily subsidized for its use in ethanol. It has been ...

After a large run up in Q1 of this year Agriculture related commodities pulled significantly. Its not uncommon for futures to take a dive after such a large run up. However, a few short months later agriculture commodities are at it again. Check out the chart of DBA: Right side of this chart is quite compelling has buying interest has shown up in recent weeks. With talk increasing about inflation and what the FOMC will do to combat it will certainly bring attention, once again to agriculture related commodities. Speaking of inflation and FOMC the dollar has been on a tear as of late. Ben Bernanke has recently been taking a stand regarding the stance the FOMC is taking. This certainly helps the dampen the fear that the market will continue to have an oversupply of dollars. The next ...

Article Source Bruce Mizrach prepared some very thoughtful questions for an interview at the Society for Nonlinear Dynamics and Econometrics Symposium in San Francisco two months ago. We discussed a broad range of topics, including my background, Markov-switching models, the Fed, oil prices, and why I blog. Below are links you can follow to see the answers to particular questions. The background for the interview and details of the questions can be found in a nice write-up by Bruce Mizrach that appeared in the latest issue of Studies in Nonlinear Dynamics and Econometrics. Here are abbreviated versions of the questions with links to the relevant video. Thanks much to Bruce for preparing this and helping make it accessible to all our readers. 1. Why economics? [WMV] [Real Media] 2. Economics training [WMV] [Real Media 3. San Diego [WMV] [Real Media] 4. Markov switching ...

Soaring oil prices were mostly to blame for the past week’s stock market sell-off, but renewed concerns about US economic growth, corporate earnings and mounting angst about inflation pressures also featured prominently in determining the market’s fate.

David Fuller (Fullermoney) commented as follows: “As the world’s most important commodity by far, this surge in the oil price is bearish for the majority of stock markets. Consequently I would assume that rallies seen since March have either been capped or are unlikely to make much upward progress until investors see evidence that crude oil has commenced a medium-term correction.”

The FOMC released the minutes from its April 30 meeting on Wednesday. Members acknowledged uncertainty about what constituted

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