Fed leaves rates alone, market yawns

The Fed talks the talk but is not walking the walk. Lots of pre-meeting about hawkishness on inflation, and then they meekly do nothing. If anything, a severe drop in housing prices will bring forward a Fed rate cut.

But the market did not react, and that's interesting.

The market is reading the Fed clearly: watch the housing market to forecast Fed actions. Homebuilding slowdown has a deflationary effect, but a housing price drop in the existing home market spells problems for consumer spending. The market is actually expecting a rate cut as the next move.

I don't think the holiday spending will be affected by any home price drop. I think the effect will be felt after. A strong stock market will hide housing market woes. For a while.