Focus on the Fed!

Just for the record, the next FOMC meeting is on Nov 10. Everyone is trading opinions about whether or not the election is a cause for a rally but a change in the Fed bias is probably a better place for people's attention. In Dec 2003 the policy statement contained this remark.

However, with inflation quite low and resource use slack, the Committee
believes that policy accommodation can be maintained for a considerable period.

And in Jan 2004 it was changed to this.

With inflation quite low and resource use slack, the Committee believes that it
can be patient in removing its policy accommodation.

This change marked the end of the great bull market of 2003. Most people believe that the Fed is done with its rate hikes in November and with equal speculation circling about inflation and deflation it probably makes sense to stop here.

Whatever people may say remember that the overnight interest rate topped in May of 2000, bottomed in June 03, and is generally expected to make either a top or near term plateau next month. People may agree or disagree with Fed policy but it certainly seems to be driving the stock market.

Fed quotes and interest rate info is of course here.