The Fed.

Today the Fed released a press statement about the FOMC meeting held Nov. 1-2. It said it expects unemployment to remain high, tapering off slowly into the following years down to levels of 6.8-7.7 in 2014 and to 5.2-6.0 in the long run. They expect GDP growth to increase slowly to 3.0-3.9 % in 2014 and then to taper off to 2.4-2.7 % in the long run. They also expect inflation to settle in the long run to 1.7-2.0%. There are some really great graphs available Here that show what I've just talked about. The news is good and bad. Good in the sense that the committee thinks that conditions will steadily improve, especially given the Europe predicament (although they do strictly caution the uncertain economic future given Europe: "Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets"). And it is bad because they are certainly not forecasting a bright economic outlook in the near-medium term future.

In Europe: European leaders have given Greece an ultimatum: it needs to decide whether it wants to stay in the euro zone or not. A secession out of the euro could risk economic chaos in Greece that could very easily spread to the countries in the euro zone. This ultimatum comes in the wake of the Greek prime minister's plan to hold a referendum on the latest bailout/austerity package it passed. A "no" vote on the referendum could cause Greece to default on their debt.

Comments- Every day the situation in Europe seems to be getting worse. There is no doubt in my mind Greece will default on its debt. What happens after that is the big question. Will Spain and Italy fall into the quicksand of sovereign debt that has certainly grasped and is not letting go of Greece? I think so. It appears to me that very soon the world is going to witness some very large scale changes. A dissolution of the euro seems very possible. These profligate nations will, in my opinion, soon face the consequences of their credit fueled over consumption. Imagine debt as oxygen. Breathe in. Now breathe some more. Keep breathing in air. There comes a point at which your diaphragm won't let you breathe in any more. This is the point that many nations are at or soon approaching. Now, get ready for the BIG exhale. You get the analogy.

The question that remains is: How to invest during these turbulent times? High frequency traders (machines) fuel volatility, Europe inspires it. I will get back to you tomorrow on this, with a piece on my thoughts and strategies for investing in this market. For now, I am done with midterms and it is time to celebrate!

Cheers,
EZ