The Federal Reserve expects the economy this year will sink at a slower pace than it previously thought, but that unemployment will top 10 percent, according to minutes of the June meeting.
The Fed now predicts the economy will shrink between 1 and 1.5 percent this year. The forecast issued in May projected it would contract between 1.3 and 2 percent.
Against that backdrop, the Fed says unemployment will be worse this year. It predicts the jobless rate could rise as high as 10.1 percent, compared with the old forecast of 9.6 percent.
The nation's unemployment rate climbed to 9.5 percent in June, a 26-year high.
A very timely forecast issued will all the other upgrades. It is quite obvious that they are gaming the market here. This is the same Fed that did not see the sub prime problem was going to affect the big banks in Feb of 2007 and the same Fed that did not think the slow down in real estate was going to slow down the economy in early early 2008. You get the picture they flat lied. They are doing it again.
The weakness in the economy was becoming so obvious that they needed to shake off the shorts and keep the longs in. I was seeing evidence that the longs were starting to capitulate. We have a long way to drop and they don't want them out yet. The "critical" support of the S&P at 877 held and eased the fears.
The earnings now are "better than expected" even though they are bad and it supports their story of an economy that is turning up. The rally could stop here but I think they want to get everyone flipped so we go higher near term. I think we need a drop dead nunber that tells everyone that the uptrend has resumed. That will be a good place to short again. This is a full court press and all the "experts" are touting the bottom. What a difference a week makes.
The beat goes on ....Mikey
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