Some financial market participants suggested that the O'Neill-Lindsey resignations were due to November's poor job report. Hog wash! Both resignations were long discussed by pundits over the past year. While market players will closely monitor the new economic team members chosen by the Bush Administration in upcoming weeks, the Treasury Secretary slot formerly filled by O'Neill is clearly more important than Lindsey's National Economic Council spot. After all, Glen Hubbard remains chair of the Council of Economic Advisors. Rumors are flying fast and furious as to who will replace the Treasury Secretary. One thing is for sure: Bush will be well served to find an individual who is well respected by market players, like Alan Greenspan and Robert Rubin. Keep in mind, though that each of these men had to earn their stripes. There are two major changes that could come about from O'Neill's departure. No one ever believed his tag line (instigated by Robert Rubin) that a strong dollar is in the best interest of the United States. A new Treasury Secretary might make the world believe that strength is indeed the dollar policy. Also, 30-year Treasury bond issuance was suspended during O'Neill's watch. The burgeoning deficit may necessitate a return of the 30-year bond, a decision made easier by a change in leadership.

The FOMC is meeting next week. No one is expecting that the Fed will change rates after last month's shocker of a 50 basis point reduction in the fed funds target. Indicators have been anemic since the last meeting, but Fed officials could well point out that a lag exists between the time when policy is enacted and when it actually impacts the economy.