Today's Game Plan: Fed-Watching

Stocks are posting small gains this morning, with the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the broader S&P 500 (SNPINDEX: ^GSPC  ) up 0.18% and 0.14%, respectively, as of 10:15 a.m. EST. Today should be the tale of two markets: pre- and post-Fed announcement. The Fed will wrap up its two-day policy meeting with an announcement from the FOMC meeting at 12:30 p.m. EST, followed by a 2:15 p.m. EST press conference. Expect subdued volatility and low volumes until the announcement, when normal trading will resume, conditional upon the Fed satisfying expectations that it will add another round of bond-buying to replace Operation Twist, which expires this month. If the Fed doesn't make good on that, things could get ugly.

Fiscal-cliff watch
President Obama and House Speaker John Boehner exchanged new offers on how to resolve the "fiscal cliff" yesterday. According to The Wall Street Journal, both offers were substantially similar to the previous ones, but the key, I believe, is that they did contain some changes. For example, Mr. Obama's revised offer calls for $1.4 trillion in increased tax revenue over 10 years, instead of the previous $1.6 trillion figure. That's how a negotiation works: Both parties start from their ideal outcome and they give up things along the way to produce an outcome that is mutually acceptable.

Breaking
Channeling Nike at a New York Times DealBook conference this morning, JPMorgan Chase (NYSE: JPM  ) CEO Jamie Dimon exhorted politicians to resolve the fiscal cliff with a "Let's just do it." Dimon also said that if the U.S. can "grasp a rational fiscal policy" and avoid the cliff, the economy could grow at 4% and add over 200,000 jobs a month. That sounds awfully optimistic; I've not seen any forecasts that come anywhere near that GDP growth figure.

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