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Today's Federal Reserve marquee event has securities markets antsy with concern about its outcome. While I have proposed several possibilities for this Fed event, and suggested what I thought would be best and what might surprise, there's one possibility that is found outside the box that is the worst thing the Fed could possibly say today. In fact, I suggest it could sink stocks, surge gold prices and push bond yields higher.

Security

Thru Noon Wednesday

Year-to-Date

SPDR S&P 500 (NYSEARCA:SPY)

-0.2%

+16.2%

SPDR Dow Jones (NYSEARCA:DIA)

Unchanged

+17.2%

PowerShares QQQ (NASDAQ:QQQ)

-0.1%

+12.8%

SPDR Gold Shares (NYSEARCA:GLD)

+0.5%

-18.1%

iShares Barclays TIPS (NYSEARCA:TIP)

+0.2%

-5.6%

Securities markets are betting here and there, but for the most part they are just waiting on the Federal Reserve at this point. In a few minutes, at 2:00 PM ET, we will receive the latest Federal Open Market Committee (FOMC) Monetary Policy along with updated Fed forecasts for the economy. The Fed is not expected to announce any change to its rate policy or its asset purchase program, but the market is on edge regarding whether it will address "tapering" concerns spurred by the mid-May release of the minutes of its previous FOMC meeting.

In a recent write-up, I suggested that the Fed had better fix the mess it created with regard to rising mortgage rates, and make clear to the market that it will not be halting the purchases of mortgage-backed securities prematurely, aka anytime soon. Otherwise, I reiterate, the Fed could derail the real estate recovery it has worked so hard to sustain.

I also suggested that the Federal Reserve's forecast for GDP has been grossly understated, and should rightly see a downgrade from its March reporting. My reasoning was two-fold, noting first the failure of the Fed to incorporate the 1.5% expected impact from the Sequester spending cuts and the payroll tax break expiration. Secondarily, I noted that the World Bank and the Conference Board, and probably many other private organizations, have much slower GDP growth forecasts than the Fed. The details can be found in my report, An Economic Shocker is in the Cards this Week.

However, the worst news the Fed could share might come later on this afternoon. Once the published news hits the wire at 2:00, Federal Reserve Chairman Bernanke will address the press at 2:30 PM ET. In a fresh interview, President Obama seemed to imply that the retirement of Benjamin Bernanke from his critical role as Federal Reserve Chairman could be imminent. Now, many have speculated that the Chairman's plan to miss the annual Jackson Hole economic event this August, being replaced as keynote speaker by Vice Chair Janet Yellen, implies he will be gone by then. Nevertheless, if Chairman Bernanke announces his imminent retirement today, it could still be more substantial information for the market to digest than any other Fed event this afternoon.

I suggest, stocks are not ready for such news, and could decline on it, and the price of gold and Treasury yields could rise. Things are truly getting interesting heading into the marquee events of the day. Let's just hope the Fed does not give us any surprises, and rather restores stability to the market.

Source: The One Fed Statement Markets Are Not Prepared For