I am recording this podcast from New Orleans, where I am attending the Investment Conference

Today, I am going to talk predominantly is the FOMC statement that came out yesterday following the conclusion of their 2-day October meeting

It was largely expected that the Fed would not raise interest rates in October and that's exactly what happened

I predicted this a long time ago

What is amazing is that, as a result of this announcement, more people expect the Fed to raise rates in December

Going into this announcement, the dollar was on the defensive, silver was up about .50, gold was up $15.00

It sure looked like people were expecting a more dovish tone from the Fed

After all, a lot of bad economic news has come out since the September meeting

When the Fed statement was released, there was no such change in language

This now leads people to believe that the statement was hawkish

They still don't understand the game: Nothing has changed.

the Fed has to pretend that a rate hike is right around the corner in order to pretend that the recovery is real

They can't admit that the economy is weak because they want to take credit for saving the economy

They have to keep pretending, and they have to keep making up excuses

Steve Leesman was asking why we need emergency rates when the emergency is over

The emergency is not over, as far as the Fed is concerned because there is no real recovery

If we had a legitimate recovery, of course the Fed could raise rates

Thus the game: they continue to talk as if they might raise rates, and the markets buy it

As soon as their statement came out, gold tanked, it ended up down about $10, silver gave up most of its gains, and the dollar was broadly higher

If you actually read the statement, there is nothing hawkish about it

It is basically the same as the September

The only thing that stands out is an absence of concern

The FOMC is not worried about all the bad news

"In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. "

None of that is going to happen. The labor market is deteriorated - the labor force participation rate is still shrinking

These are metrics Janet Yellen needs to see improve

The Fed knows that these minutes will be misinterpreted

They want to preserve the illusion that a rate hike is possible so they can preserve the illusion that this is a legitimate recovery and not a gigantic bubble

But, what's going to happen when the Fed doesn't raise rates and ends up launching QE4 the Fed is going to have zero credibility

The U.S. economy is in worse shape now than it was leading into the 2008 financial crisis

Now everybody is talking about how important the jobs number will be - the Fed has not raised rates in 7 years. How can one jobs report make the difference?

Meanwhile we've had months of stronger jobs numbers and the Fed did not raise rates

I think the truth is the Fed has decided not to raise rates

But they still need to maintain the perception that they might raise rates and that's the only explanation for the Fed's rhetoric

Now let's get into this week's data, including today's release of Q3 GDP numbers

They were looking for 1.7%, which is a sharp slowdown from the Q2 3.9% GDP number

This one came out at 1.5%, slightly below estimates