January was a great month for the financial markets. Despite the government shutdown, signs of an economic slowdown, and dropping consumer and business confidence, U.S. and international markets were up. Plus, job and wage growth were strong, and companies made more money than expected. With the fundamentals solid, even the Fed hit pause on interest rate increases.

Well, as expected, the Fed did not raise rates yesterday. Further, it came out with what was perceived as a much more dovish statement than anticipated, essentially declaring a pause in rate increases. In response, markets cheered. Beyond that, the Fed issued a deliberately obscure piece on balance sheet normalization that, without making any commitments, stated that the Fed now expects to maintain an “ample supply of reserves.” Again, markets cheered.

With the brutally cold weather locking down large parts of the country, the hope today is that the Fed will heat up the markets by both holding rates steady (as expected) and dialing back the liquidation of its balance sheet. Personally, I think investors should be careful what they wish for. If the Fed really does slow the quantitative tightening process, in conjunction with keeping rates steady, it could be a sign of an even colder economy ahead.

I found a really interesting chart in my e-mail this morning. I think its implications extend well beyond what it actually shows, and so I thought it worth sharing. The chart is below, but the full version and discussion can be found on howmuch.net.

Although the government shutdown has now ended, several of last week’s scheduled economic reports were not released, and it is still undetermined when they will be made available. Similarly, this week’s data releases may also be affected.

Is the government shutdown becoming normalized? I discussed this and more (my segment begins at 1:38) this morning on Yahoo Finance Live: On The Move. 

Yesterday, we talked about what consumer confidence might be telling us about the economy. It seems the current news is great—with confidence very high and up over the past year. But a closer look at the data showed that there are some real signs that the future might be considerably less cheerful than the current data would suggest.

As I’ve noted before on this blog, in many ways, the current economy is as good as it gets. It is bound to moderate or roll over—only to see things get even better. This scenario has been going on for some time now, to the point where I want to think about what could really signal a downturn. Could consumer confidence be one of those signals?

In a previous life, I was involved in real estate, including properties catering to the growing older population. Those properties were divided into three main categories: active adult communities, aimed at the vigorous, relatively young retirees; assisted living communities, aimed at those who wanted some extra help; and skilled nursing facilities, aimed at those who needed full-time care. Respectively, they were known in the industry as the go-gos, the slow-gos, and the no-gos.

Last week was a busy one on the economic front, but several reports were not released due to the government shutdown. As such, I will report on expectations, but we won’t know how the actual data has come in until the government reopens. Where possible, I will comment on anything we do know.