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Five Conjugations of Fed You Need to Know: Fed, Feds, FedEx, Federer, Federales

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What you need to know (and what it means)!

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Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:


It's all in the conjugation.

Fed [fed] verb, - fed, feds, fedex, federer, federales.
- verb (used with object)
1. to distend; swell or puff out; pump, as in the supply of money
2. to cause to expand permanently, as in M3
3. to verbally obfuscate; confuse; misdirect, as in policy effects and consequences

[Origin: Jekyll Island, 1911, Nelson Aldrich, J.P. Morgan, Frank Vanderlip, Woodrow Wilson, 1913 Federal Reserve Act]


1. Fed Shifts to Timid & Indecisive Bias

The Federal Reserve Open Market Committee formally shifted their bias to "Timid & Indecisive" yesterday.

  • First, we should note the dramatic shift in the Fed's housing assessment.
  • In less than 60 days we've gone from "signs of stabilization have appeared in the housing market," to "the adjustment in the housing sector is ongoing."
  • Here's what's actually missing from the new FOMC statement: "the extent and timing of any additional firming."
  • Now the Fed says, "Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."
  • Of course, the Fed is still "worried" about "readings on core inflation."
  • And well they should be. The Fed, after all, is what creates inflation, not what stops it.
  • When we read these statements by the Fed, and listen to the Fed speakers as they hit the talk circuit (even the anonymous "Dr." Alan Greenspan), read their speeches, and then place them side-by-side with the actions of the Fed itself, we begin to realize what the American economic diagnosis is: Munchausen Syndrome by Proxy.
  • Munchausen Syndrome by Proxy is a disorder where the caregiver intentionally causes illness in that which is being cared for in order to fulfill an emotional (or in this case self-referential) need.
  • Symptoms include:
    1) That which is being cared for only gets ill in the presence of the caregiver. Check!
    2) The caregiver assumes a primary and dynamic relationship with a reporting authority or assistance provider. Double check!
    3) The caregiver is incapable of acknowledging or recognizing anything wrong with its actions. Triple check!
  • Anyway, here's the bottom line: Yesterday's FOMC statement will, in time, be viewed as a shift from a tightening bias to a "timid & indecisive" bias in the face of spreading real estate problems.


2. Feds Shift to Anti-Mortgage Bias

Today's Wall Street Journal takes a look at how the Feds are looking at "cracking down" on lax Federal regulators.

  • According to the Journal, Federal regulators over the past decade issued rules to tighten standards for making loans to borrowers with weak credit or low incomes.
  • But guess what? Despite that, lending standards declined and loan volumes surged anyway!
  • Go figure.
  • Anyway, The Feds (and the Fed) are now intent on cracking down on the Feds responsible for this growing Federal debacle.
  • Sen. Christopher Dodd (CT-D) has been firing off letters to, among others, Federal Reserve Chairman Ben Bernanke, FDIC Chairman Shela Blair and Comptroller of the Currency John Dugan.
  • A Senate hearing on the matter will be held today and the House next week.
  • Feds Fighting Feds!
  • It's like a civil war within a civil war waged by civil servants against civil servants.
  • Next on the agenda? Civil suits.


3. FedEx Shifts to Deflationary Bias... Practically Overnight!

FedEx said yesterday that profits fell 2% in the third quarter "due to a slowing economy."

  • Unlike the Fed, which continues to see the economy continuing "to expand at a moderate pace of the coming quarters," shipping company FedEx was explicit yesterday that the economy is slowing.
  • Net income fell to $420 million, or $1.35 per share, from $428 million, or $1.38 per share, in the year-ago period.
  • And the company lowered its earnings forecast for the fiscal fourth quarter to a range of $1.93 to $2.08 per share, from a previous range of $1.98 to $2.13 per share.
  • "The economy grew at a lower rate than we expected in the third quarter, and we saw continued adjustments in the automotive and housing markets." Frederick Smith, the company's chief executive officer said in a statement.
  • So far, so good.
  • Then, practically out of the blue, Federal Reserve President FedEx CEO Smith added, "I believe, however, this represents a healthy transition for the economy as it phases into a more sustainable growth rate."
  • Smith then left short-term interest rates unchanged.


4. Federer Shifts to Tiger Bias

Tennis star Roger Federer visited golf star Tiger Woods yesterday at the CA Championship at the Doral Golf Resort and Spa, walking with Woods inside the ropes during a practice round.

  • Woods and Federer first met last year at the United States Open tennis final, where Woods and his wife, Elin, were guests in Federer's box.
  • Since then a friendship has been born, according to the New York Times.
  • Woods and Federer have exchanged tips on everything from the mental to the physical aspect of competition, according to the Times.
  • Woods has won 12 major championships, and Federer has 10 grand-slam titles.
  • Federer and Woods are competing in the same city at the same time, with Federer at the Sony Ericsson Open about 20 miles away., the newspaper said.


5. Federales Shift to Anti-Tabasco Bias

500 Mexican Federales apparently raided and took over the Public Security Secretariat of southern Tabasco state March 17, and arrested three high-ranking police commanders.

  • According to the Web site, seriously, "World War 4 Report," the three officials who were fired were part of a "clique" known as "La Hermandad" (translation: The Dad of Herman).
  • Actually, that apparently doesn't mean "The Dad of Herman," according to the World War 4 Report, but "The Brotherhood."
  • Look, we're not going to lie to you.
  • This may or may not be a true story.
  • But we needed something to match our "Fed Conjugation" theme and this is what came up on Google News.
  • You try coming up with a ridiculous theme and seeing it through to the end, though!
  • This stuff doesn't write itself.
  • Actually, we just made that up too. It pretty much does write itself.
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No positions in stocks mentioned.

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