Yesterday, while I was driving home from the office I suddenly felt a tweak in the air- the winter had set upon us and the cometh of the winter was heralded by the chill in the air. The layers of our clothes have shot up with sweaters and jackets replacing the thin layering of the summers. The residents of the valley are flocking the stores to buy appropriate clothes for the cold season. The temperatures in the valley have dropped dramatically to 2° and the officials at the hydrology and meteorological department have forecasted a further drop in the days to come. Across the distance, in the bleak mid-winter, all eyes are on the Fed meeting and its resultant actions.

The Fed’s meeting on Tuesday is expected to reassure the markets that it could ease further if needed. The events across the Atlantic will surely be a priority on the agenda of the meeting as the Fed look for ways to ease the straining conditions that the economy is undergoing at the moment. While the consequent Fed statement is the big event of the day, investors are also closely following the November retail sales to see if they can derive any noteworthy affect on the markets. The Fed watchers also exclaim the Fed could lay the ground work for an announcement in January of a new, more transparent communication policy. It also may welcome the slightly improving economy.

Some economists have opined that it made sense the Fed would announce the communications strategy in January since the Fed Chairman is scheduled to hold a press briefing and the Fed will also issue a new economic forecast. Under this new strategy, the Fed could emphasize that it expects to keep the Fed funds rate at zero for the next two years and add language that says what it would consider in order to change that in the future. However, economists have also noted that the Fed is also wary of Europe’s sovereign debt crisis which continues to drive the markets. Some economists have even forecasted another round of QE measures, which would involve the purchase of mortgage securities sometime at the end of the first quarter or beginning of the second quarter. On Monday, the markets had reacted negatively to the outcome of the EU summit and the lack of the commitment by the ECB. All the major indices including the S&P 500, NASDAQ & Dow Jones fell due to the negative vibes generated from the summit.

The investors will surely be glued to their seats awaiting the outcome of the Fed meeting as they burn the midnight oil to warm themselves in the cold days of winter.