Did the Fed just say December?


Editor's Note: Combining his passions for the markets,humor and food, "What's cookin' with Kenny Polcari" is a blog published twice weekly on With more than 30 years of experience on Wall Street, Polcari provides insight and analysis on the markets, as well as a recipe du jour. Buon Appetito!

Here's what's great about the English language: you can say so many things, which seem clear, but in the end, are anything but — for example:

"I did not have sex with that woman." — President Bill Clinton.

"If you like your health-insurance plan, you can keep your health-insurance plan. No one will take it away from you. Period." — President Barack Obama.

Ben Bernanke, chairman of the Federal Reserve.
Getty Images

"Taking into account the extent of federal fiscal retrenchment over the past year, the committee sees the improvement in economic activity and labor-market conditions since it began its asset-purchase program as consistent with growing underlying strength in the broader economy." — Federal Reserve Chairman Ben Bernanke.

Discuss. In the first two examples, the interpretation is all about one little word. But in the third example, the whole statement causes us to wonder if the Fed will surprise us in December. NAH! Not happening. I mean, how can it? Half the world is on vacation from early December through year end. Would Benny announce such a program one week before Christmas? Will he trump Mrs. Yellen right before he hands her the reins? Will the macro data points improve so much to make tapering a possibility? Impossible? No. Doubtful? Yes.

Stocks retreated — well, kind of — after the Fed said that the U.S. economy is still in need of help, but then again, maybe not. The announcement, which came at 2 p.m., clearly stated that they all systems are go: $85 billion a month until unemployment drops and the economy improves. It's just what the market expected to hear and so we saw that classic "buy the rumor, sell the news" reaction.

(Read more: Stocks poised to log 3-percent gain for October)

Or was it the post-mortem analysis by the many analysts that get paid to read the tea leaves? Somehow they agree that Benny left the door wide open for the possibility of tapering to begin in December and that chatter came right to the surface — within minutes — as Twitter lit up with the possibility. Are we really gonna go down this road again?

Some of the source of concern was the elimination of some language from the statement, including concern over tightening of financial conditions and higher mortgage rates while adding the fact that household spending and business investment seem to be advancing.

While it is clear that the Fed remains poised to continue stimulating, it is also clear that this five-year-old stimulus plan — deploying record amounts of cash — may be good for the banks, but not so much for the broader economy as we witnessed more weak macro data. Wednesday's announcement that they want to see more "evidence" before any change in policy sounds like a broken record. We all know what they want, but it leaves one to wonder: Is the economy's continued weakness a direct result of the Fed's efforts?

Of course, the government shutdown and steep oil prices didn't help the economy either. And yet the market is making new all-time highs as a direct result of continued Fed hand-holding. Meantime, complacency is at new highs, margin debt is approaching new highs, bears are beginning to capitulate and you hear daily cries for S&P 1,850 by year end as strategists make you believe that "There will never be another down day on Wall Street!" Oh, boy. Here we go! If that's not the kiss of death!

Wednesday's announcement will surely be a topic of conversation among the international paparazzi because the stimulus program is forcing the dollar lower/driving other currencies higher, making it difficult on those economies. So will continued stimulus in the U.S. force other countries to launch more aggressive policies to force their currencies lower vs. the dollar? Will we be talking currency war again?

(Read more: Taper tease? Market worries Fed will end easing)

Remember, it's month-end, so there will be some window dressing going on, but with no real directional driver. Do not expect the markets to make a dramatic move. A test of near-term support at around 1,755 would not be out of the question. Volumes of late do not predict a break lower just yet.

From parsing the scraps of Fedspeak to making a delicious dish from pasta scraps, here's Kenny's recipe of the day:

Maltagliati pasta with Cannelloni beans

Erich Schrempp | Getty Images

Maltagliati - pronounced: Ma - tal - ya- ti

A couple of years ago I had the incredible experience of being in Manciano, Italy, which is a town/village of some 3k families set in the hills of Tuscany in the Province of Grosetto. It was an incredibly beautiful, peaceful place. Today's recipe comes from one of the local restaurants. It is easy to make and is a great winter dish.

Fresh Maltagliati pasta is a pasta which is made from scraps and left over after other pastas have been made. The random shapes of maltagliati pasta have become so popular in some parts of Italy that some companies actually deliberately manufacture this pasta. Maltagliati literally means "badly cut" and refers to the odd shapes – and although originated in Emilia Romana – you can be sure that Italians have been using their freshly made pasta scraps for many years- because – Why would you throw out perfectly good pasta? In the event you cannot get it – you can just as easily break up lasagna to make the "Maltagliati."

For this you will need:

  • Maltagliati pasta
  • Cannelloni beans
  • Water
  • Olive oil
  • Garlic
  • Onions
  • Salt
  • Pepper

Begin by sautéing some crushed garlic in olive oil on medium heat, but careful not to burn the garlic. Now add one diced onion and sauté some more (maybe 10 minutes).

Next, add two cans of Cannelloni beans, but do not strain. Add three cans of water, season with salt and pepper, bring to a boil and then turn heat to simmer. Stir occasionally. After 20 minutes, remove two ladles of beans and set aside. Now in a food processor, blend the remaining beans to form a thick soup, return to the pot and add back the beans. Now, take your fresh pasta and add directly to the soup and cook. Fresh pasta will cook in like 3 minutes, so be careful. Serve immediately in warmed bowls with plenty of fresh grated Parmigiana cheese.

—By Kenny Polcari, director of NYSE floor operations, O'Neil Securities and CNBC contributor, often appearing on "Power Lunch." The author is not compensated by CNBC for this or any other written materials found on

About Kenny: Kenny has more than 30 years of experience on Wall Street. Currently director of NYSE floor operations on behalf of O'Neil Securities, he has also worked for Icap and Salomon Brothers. You can follow Kenny on Twitter @kennypolcari and visit him at

Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.