There was a lot to digest from yesterday’s FOMC minutes and subsequent Ben Bernanke press conference. But one of my biggest takeaways is that the central bank predicts that the jobless rate will dip below 8% by year’s end.

Mean, median and mode are three very common statistical words that could have huge implications on the market.

Why Bill Gross thinks QE3 isn't far off -- and what that could mean for bond investors.

Big bank stocks received a boost when many of them passed the Fed's latest stress tests today.

Temporary inflation was one of the few substantive changes Federal officials predicted in its much-anticipated announcement this afternoon. But that hasn’t stopped stocks from nearing multi-year highs.

Income stocks have never looked better than after yesterday’s Fed bombshell.

If you're looking for yet another reason to own physical gold, look no further than the unbelievable situation that continues to unravel with the MF Global debacle.

Yesterday stocks fell on "European pessimism" and that's after stocks rose Friday on "European optimism." But nothing happened over the weekend to change Friday's viewpoint...

Goldman Sachs (NYSE:GS) Chief economist, Jan Hatzuis is forecasting 0.5% GDP growth for the first quarter of 2012. He also predicts that the Fed will announce QE3 in the next 6-9 months.

The market seems to be expecting Bernanke to do something. Perhaps he will announce the "twist" selling out of short-term Treasuries and buying the long ones.

Today is Fed day. Bernanke will have spoken by the time you read this, so I will not go into any detail about my own expectations. Suffice to say I don't expect the Fed to announce any new stimulus.

The U.S. economy expanded at a 1% rate in the second quarter. This is revised lower from 1.3%. Investors expected this, so it's not a market moving number.

Growth actually improved from the first quarter, and that's one reason I think the Fed stands down today. We should expect growth to pick up a bit more for the end of the year.

The end is near for one of the world's greatest tyrants. 40+ years ago, the world allowed a ruthless dictator to come into power. This dictator used their power to fund endless war, terror and State sponsored killings, theft, imprisonment - even torture.

But lately, that power is on the wane. Loyal supporters continue to deny that anything is wrong - or even that anything is changed.

I might be talking about Muammar Gadhafi, but I could just as easily be talking about the Federal Reserve Note, or dollar, in common parlance.

Stocks are up today, so far. Speculation that the Fed will not be able to resist more quantitative easing is putting a floor under stock prices. And the news that Qaddafi is just about defeated in Libya is helping the good vibes.

But clearly, this market will need more than speculation about the Fed and the easing of some geopolitical tension.

We need some economic data to show a little growth, and ease the worries that the U.S. economy is slipping back into recession.

Today I'd like to take full advantage of the power you give me. You might not realize it, but you are one of many. Tens of thousands of people read the words I write every day.

And while it's easy to forget while I sit here alone behind a keyboard, my 3 month old son cooing in the next room while my wife makes coffee - I have your attention for a few minutes each day - and that attention means something.

There's nothing about having the attention of thousands of people that I take lightly, which is why you should know that I do not accuse Ben Bernanke lightly.

The market had a productive day on Friday. Although the indices declined, many rebounded from over 2% down during the afternoon and closed near even. Volume was jacked during Friday's day of indecision, and it appeared as though the bulls had stolen some of the bears momentum.

Then, after the market closed on Friday, the analysts at S&P dropped a nuclear bomb on the market. Late Friday night, S&P lowered the U.S. credit rating from AAA.

Any stability the market achieved on Friday is gone. The downgrade of U.S. debt is an event many market participants were unprepared for.

Financial markets like money. When the Fed was pumping cash in to the system via QE2, stocks moved relentlessly higher.

Yesterday's vicious sell-off was a snapshot of a market worried about a lack of money.

The debt deal passed in Congress yesterday calls for $2.4 trillion in government spending cuts over the next 10 years. We looked at some of the impact of reduced government spending yesterday...

I know I've spent the last two days resisting the temptation to discuss the debt ceiling.

But I can resist no longer.

Monday night, President Obama went on TV and said something that made me very angry...

Over the weekend, new capital requirement rules for large banks were finalized. Known as Basel III, these rules will add as much as another 2.5% to some banks Tier 1 capital. That brings the total to as much as 9.5% for banks that are deemed to be too big to fail.

These new rules are designed to keep banks from over-leveraging and causing a repeat of the financial crisis. But it should also be clear that even a 9.5% Tier 1 capital requirement is not a big requirement. Banks will have no trouble raising their Tier 1 capital to the new levels by the 2019 deadline.

In reality, this is a token move and won't affect the banks much. It definitely doesn't do much to prevent another crisis. But it may be good news for banks stocks. One reason for the recent weakness in bank stocks is uncertainty of new financial regulations. With this Basel III agreement, some of that uncertainty is removed.

In an international game of 3-card Monty, it seems as though the Federal Reserve's Quantitative Easing (QE1/QE2) program has done little else but to help capitalize insolvent European banks.

Take a look at the chart below, which shows the "coincidental" infusion of nearly $700 billion into the balance sheets of Foreign banks at the same time that the Federal Reserve pumped the same amount of money into the markets via QE2.

It's not clear exactly how the funds ended up on the balance sheets of the European banks, but what is clear is that American banks experienced no such balance sheet boost over the same period. Why is the Fed now backstopping European banks? Well it's pretty clear that Europe's sovereign debt issues are somewhat more advanced that America's, so maybe Bernanke is trying to quarantine those issues to the other side of the Atlantic.

In any event, the effect is clear, regardless of how it's achieved.

And the lesson to be learned is now an old one: you can't trust the Fed or the banks.

If you're interested in investing in a bank that has nothing to do with the Fed, Wall Street or the typical too-big-to-fail "bankster" institutions, check out the full write up on a Manhattan bank that didn't take a dime in bailouts. And it's currently paying an 8.2% dividend to shareholders.

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The market's bid to break its 6-week string of losses is back to square one. The EU promised to have a solution for Greece hammered out this month. It's clear now that Greece is going to do a polite default. That is, its debt will be restructured so that current bond holders take a haircut and receive new debt designed to give Greece a little breathing room.

But so far, they can't agree on how to structure the deal.

Stocks are trying to bounce back after 6 straight weeks of declines. As we noted on Friday, the S&P 500 didn’t even post 6 straight down weeks during the financial crisis. So this string of losses has been somewhat remarkable.

Of course, the decline over the last 6 weeks hasn’t been particularly large. As of last Friday’s close, the S&P 500 is down around 7% from its May 2 highs.

The S&P 500 is about to conclude its 6^th straight week of declines. Amazingly, there haven’t been 6 straight down weeks since 2002. Even the financial crisis didn’t give us that many consecutive weeks with losses.

Of course, the losses came a lot swifter in 2008 and 2009. So far, this correction has only taken around 70 points off the S&P 500. That’s around 5.5%.

Oil prices jumped yesterday after the latest OPEC meeting in Vienna fell apart with no agreement about production increases.

I don't think it's any coincidence that Saudi Arabia's desire for increased production was not endorsed by Iran or Venezuela. Neither country is exactly America-friendly.

There is a budding divergence between economic data and corporate forecasts. We’ve seen a stark deterioration of economic data across the board. Manufacturing surveys have weakened, auto sales were down in May and then, of course, we got the icing on the cake with the pitiful employment numbers last week.

 

Economists and strategists have been falling all over each other as they lower their 2011 GDP estimates. (Of course, Daily Profit readers had a heads up, as we noted the change in the Fed’s outlook after the last FOMC meeting.)

As expected, today's Nonfarm Payroll number was just as bad as the ADP Payroll indicated it might be. Expectations were that 165,000 jobs were added in May. The reality is that we got only 54,000 jobs.

Soft patch, indeed.

The economy has been adding an average of 220,000 jobs for three months running. 54,000 is a big miss, big enough to push the unemployment rate up to 9.1%.

When I saw the headline that “Greek Aid Package to be decided by June” my first thought was “Great! That’s tomorrow…”

 

But of course, first impressions can be deceiving, as can misleading headlines.

 

The deadline for a(nother) Greek bailout is the end of June, which means we get to hear about for another month. I’m sure you’re very bit as excited about that as I am.

The fact is, the stock market rarely sells off for one reason. The issues from Greece might be making all the headlines, it's not the only catalyst. Economic data has been weakening, the end of QE2 is looming, government spending is likely to get reigned in, albeit slightly, and the stock market has been on a remarkable run since last August.

"Restructuring" is just a nice way of saying "default." Basically, Greece would tell its creditors that it can't make full interest payments on outstanding debt (bonds), and that those creditors must accept new bonds with different interest rates.

Nearly a month ago, after the last Fed meeting, we started to discuss the likelihood that the U.S. economic recovery was slowing down. After all, the Fed had just lowered its GDP forecast for 2011 and acknowledged that inflation was picking up as a result of QE2.

 

The S&P 500 was above 1,360 at the time.

Does anyone care about the housing market anymore? This morning's new housing starts number for April was awful; 11% lower than March and well below the expected number. The housing market is truly in the dumps.

The U.S. homebuilder's sentiment index has a mid-point of 50. Any reading below 50 is considered poor. For April, the index registered 16 -- for the second month in a row.

When Fed Chief Ben Bernanke told us that he believed inflation was “transitory”, he was saying that commodity prices were higher due to Fed monetary policy.

 

When Bernanke went on to say that he would let QE2 end and not immediately fire up the QE3 engine, because the risks of further inflation were not being offset by gains in employment.

 

Put simply, Bernanke said inflation was all (or at least mostly) his fault.

The "slowing growth" theme we've been discussing has now worked its way into the headlines. Today's ADP report that the private sector added a less than expected 179,000 jobs in April is being billed as a sign that the recovery is not moving as fast as we'd like.

Today's oil inventory report is also being interpreted as measure of slowing growth. Crude inventories rose 3.2 million barrels last week, higher than expected.

Oil price initially dropped this morning, but quickly rebounded. The dollar is also enjoying some upside today. It will be interesting to see if oil, and stocks, can maintain their positive bias.

As I discussed on Friday, we’ve gotten some economic data that is less than robust. Q1 GDP growth was just 1.8%. And the Fed has lowered its full year growth forecasts.

The market activity was rather mundane on Thursday, but the indices did build on the gain from earlier in the week. Most indices now trade at the highs of this month and above the February highs,

It was somewhat lost in the shuffle in Wednesday. Investors were so stunned at Fed Chief Ben Bernanke's admission that commodity inflation might accelerate over the next few months before the Fed is forced to act on interest rates, they missed the part where the Fed lowered its 2011 GDP growth estimates from a range between 3.4% -- 3.9% to 3.1%.

For anyone pinning his or her hopes on 3.9%, that's got to be disappointing.

But after yesterday's first read of Q1 2011 GDP growth -- a measly 1.8% -- investors are likely to take another look at the total message delivered by the Fed.

All eyes were on the Fed yesterday as Ben Bernanke gave the first ever press conference by a Fed Chief following an FOMC meeting. And I have to say that Bernanke was remarkably candid as he was peppered with questions about inflation, quantitative easing and interest rates.

 

Bernanke did a verbal tango that could put him on Dancing with the Stars. Yes, he pumped the system with boatloads of cash in a Treasury-buying spree known as QE2. But he also admitted yesterday that such stimulus does carry inflation risks, and those risks may not offset the potential gains in employment.

The end of QE2 is perhaps the biggest question mark right now. It might be the perfect ironic outcome if Treasury bonds rally after the Fed let's its Treasury buying program end.

The Fed was deliberately attempting to prop up the stock market with QE2, driving money out of bonds and into stocks. That's the "risk on" trade, appropriate for when the Fed is backstopping assets.

The market reversed early gains yesterday morning to close mostly lower. Volume was fairly light except in the Nasdaq, which had heavier volume as a result of a technology sector downgrade. SPX made

In a speech yesterday, Fed Chief Ben Bernanke made two very important statements. First, he said that he believes the inflation we are experiencing due to higher commodity prices is temporary. Second, he said he could be wrong.

The specific quote goes like this:

“We have to monitor inflation and inflation expectations extremely closely because if my assumptions prove not to be correct, then we would certainly have to respond to that and ensure that we maintain price stability...”

And speaking of Warren Buffett, one of his top executives, David Sokol, has resigned on accusations of insider trading. Apparently, Sokol bought $10 million worth of Lubrizol (NYSE:LZ) before he suggested a Berkshire-Hathaway buyout of the company to Buffett.

Lubrizol stock jumped nearly 30% on the news that Berkshire would acquire the company. Sokol made nearly $3 million on the deal. And he is insisting that he did nothing wrong.

The Fed is set to release data about lending from its discount window during the financial crisis some time this week. Conspiracy theorists often point to the Fed's overnight lending as a sure sign that the financial markets are manipulated with cash infusions by the Fed. Really, in a general sense, these open market operations are there to provide short-term liquidity to qualified banks to help them settle daily transactions. This lending is also used to manage monetary policy on a daily basis.

The market eventually closed negative Monday as the indices settled lower in late day activity. All indices had been higher throughout the morning, but gradually slipped negative in the final hour of

I can't say I'm surprised that Bank of America (NYSE:BAC) was not allowed to raise its dividend payment. And while BofA didn't specify the reasons its plan was rejected, I think we know pretty much why.

For one, Bank of America is still struggling with mortgage issues. And it's setting aside cash to cover potential "put-backs" of mortgage backed securities it sold. Plus, Bank of America is barely profitable. Its main source of earnings right now is coming from loan loss reserves that are returned to its balance sheet and counted as earnings.

The Nikkei took back nearly 500 points in Wednesday trading. That's what happens a central bank pumps nearly $700 billion into the banking system, as the Bank of Japan has.

The rally for Japanese stocks is not an indication that the situation there is improving, or even stabilizing. The danger of radiation leaks has increased. Clouds of radioactive steam still rise into the air as workers struggle to keep spent nuclear fuel rods cool.

The Bank of Japan pumped $183 billion in yen yesterday to try and contain the damage to the Japanese economy and stock market. It didn't work.

 

The Nikkei dropped over 1,000 points in Tuesday trading, better than 10%. That's after a 5% drop Monday.

 

That qualifies as a crash. And it's no "flash crash", either.

I'm starting to feel like I don’t have enough zeroes on my calculator...

Let me see if I have all this straight: we have a record high Federal deficit, 9% unemployment, a housing market that still hasn't bottomed, a Federal Reserve that's hell-bent on spending our way out of a debt crisis, a banking system that won't lend but wants to pay dividends, a looming energy crisis, instability in the Middle East, soaring commodity prices, Europe has a never-ending debt crisis, China can't stop its own inflation, Japan is on the brink of nuclear meltdown, and Apple's iPhone reportedly couldn't handle the daylight savings time change.

In fact, I read that one user called her iPhone "stupid."

Ye gods.