The Federal Reserve, in the person of Chairman Alan Greenspan, announced another increase of 25 basis points (1/4 of 1 percent) in the Federal funds rate, marking the third increase this year. A quarter-point increase in rates during September had been expected and was fully reflected in fixed-income and equity markets at the time of announcement. Consequently, there was no noticeable movement in financial markets when the FOMC announcement was reported. However, the growing sense of uncertainty as to the strength of the U.S. economy is weighing on the market. Job growth remains paltry. Capital spending by corporations continues to be muted. And the war in Iraq keeps the optimistic, entrepreneurial American spirit somewhat in check. On top of all this, the negativity of both political parties, prior to November elections, further undermines the political process.

We do not expect to see any noticeable movement in financial assets until after the November presidential election. A clearer outlook of the course America will follow in the years ahead is needed, in our opinion, to revive confidence in our economic system and reinvigorate capital investment and economic expansion.

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