Markets have been ho-hum today but it’s a big week and two of the main events are GDP and the FOMC meeting.
The main story with GDP (as always) is the estimate on growth but Jon Hilsenrath explains that annual revisions and a change in accounting for international trade add other risks.
The other is an op-ed in the WSJ from Dallas Fed President Richard Fisher, who is a current FOMC voter. He writes that he’s “increasingly at odds with some of my respected colleagues at the policy table” about keeping rates low and lays out an alternate blueprint.
The FOMC should consider tapering the reinvestment of maturing securities and begin incrementally shrinking the Fed’s balance sheet. Some might worry that paring the Fed’s reinvestment in mortgage-backed securities might hurt the housing market. But I believe the demand for housing is sufficiently robust to continue improving despite a small rise in mortgage rates. Then early next year, or potentially sooner depending on the pace of economic improvement, the FOMC may well begin to raise interest rates in gradual increments.
It’s tricky how a dissent from Fisher might work but there’s a chance he could make some waves this week.
Finally, here’s a fun read on bizarre superstitions and habits of traders.