FOMC: KEY FACTORS WHICH ARE ABOUT TO DO A U-TURN

In the minutes, the FOMC quoted:

"September suggests that economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates and housing sector has improved further, however, net exports have been soft "

Household Spending

September Consumer Confidence Index 102.6
October Consumer Confidence Index 97.6 (drop of 5.0 month on month)

September US Retail Sales rose by a mere 0.1% with August revised down as being unchanged instead of a rise of 0.2%.

Business Fixed Investment

On the day of the FOMC meets, Durable Goods contracted 1.2% in September, with August's contraction revised lower to minus 3.0%.

Housing Sector

A day before the FOMC meets, new home sales fell to an annual rate of 468,000 in September, 67,000 below the low-end of estimate and lowest rate since November 2014.

August new home sales was revised down by 33,000.

MBA Mortgage Applications

On the day of the release of the minutes, October purchase applications (for the week ending October 23), slipped 3.0%. while refinancing applications were down 4.0%.

So in a nutshell, based on recent data things are indeed much worse than what the FOMC stated.

How could Household Spending be solid when Retail Sales rose 0.1%? Or when Consumer Confidence declined to 97.6 from 102.6 a month earlier.

How could Business Fixed Investment be solid when Durable Goods fell 1.2% in September?

How could Housing Sector improved further when New Home Sales fell to the lowest in almost a year? How could it when Mortgage applications had also shown declines lately?

These are the same questions that will hound the Federal Reserve. Today's GDP data will give a better indication. Consensus estimate is 1.7% growth, but the widely followed and accurate data at the Atlanta Federal Reserve, shows 0.9%.

One thing for sure, it's going to be a bumpy ride all the way to December. Will the Federal Reserve act to salvage its reputation despite the negative data, or will they admit that the state of  the economy does not warrant an interest rate hike as yet.

The above are just my opinion, of course.