The story remains the same after taking into account the economic reports, including the key employment situation figures for October. The economic recovery is sluggish. Special factors may skew down economic indicators for September and October. Hurricane season dampened oil and gas activity in the South for at least two weeks of September. Market players and policymakers have to be concerned with the longshoreman strike on the West Coast. There is no question that retail sales will be impacted, as well as industrial production and international trade. These indicators are likely to be hampered in October. The amount that economic activity will be dampened certainly depends on the duration of the strike. Some analysts wonder whether this may be the straw that breaks the camel's back - and push the U.S. back into recession. If the strike is long enough, there is no doubt the data will look bad.

Economists are in a quandary whether the Fed will cut the fed funds rate target or not at the November FOMC meeting. They feel that the employment situation for October was not sufficiently decisive. Well, lucky for the Fed, they won't need to make their decision until they see the November employment report.

Does it matter whether the Fed reduces the funds rate target 25 or 50 basis points? In reality, it doesn't. Market rates have reached historical lows. If banks wanted to lend money, they could reduce rates on their own without the Fed's initiative. In any case, the most credit worthy companies already tie their business loans to market rates. Consumer loans are generally tied to the bank prime rate - currently at 4.75 percent. If banks were inclined to boost loan activity, they could easily reduce their prime rates. In fact, a handful of banks are advertising home equity loans at 4.5 percent, a quarter point less than the prime.

Paul Krugman, a prominent economist and New York Times columnist, noted today that while the Fed could lower rates, we are in an over-investment slump that will not really be helped by a rate reduction. Rather, the economy would benefit more from additional stimulative fiscal policy - for instance, tax rebates and extra generous unemployment compensation. There is no question that monetary policy is more effective when it is not being counterbalanced by fiscal policy.