Ahead of the 2 day FOMC meeting, in order to help guide them in their decisions I want them to digest the following stats so as to compare the conditions of Dec ’09 with that of Dec ’08 when they cut rates to a range of 0 to .25% from 1%. Since Dec ’08, the US$ index is down 7%, gold is up 33%, oil is up 57%, the CRB index is up 21%, the S&P 500 is up 28%, the 10 yr note yield has gone from 2.51% to 3.54%, the 30 yr to 4.48% from 2.96%, the implied inflation rate 10 yrs out has gone from .15% to 2.22%, the implied rate 5 yrs out has gone from -.23% (yes deflation) to 1.92%, Nov ’09 job loss was 11k, Nov ’08 was 597k, the ISM services index has gone from 37.4 to 48.7, the ISM manufacturing index went from 36.6 to 53.6, y/o/y CPI for Nov ’09 is expected to be 1.8% vs 1.1% in Nov ’08. The main stat that has continued to worsen is the employment rate which has gone to 10% from 6.8%. While times are still very uncertain, the period of free money should end now.
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