Beige Book risk asymmetrical this afternoon

Which way do you think the market is leaning in terms of the tone of the Beige Book, the report compiled by the regional Fed branches ahead of each FOMC meeting?

I’ll tell you: It is leaning toward a Beige Book forecasting a significant dip in US growth since the last FOMC meeting.

With 14 of 14 US economic releases coming in below expectations, anything else would be a major surprise.

So, the risk form the Beige Book is that it is not as bad as expected, which would trim QE3 expectations, at the margin.

A poor report is baked in the cake. A reasonably upbeat report is not, so the dollar will only fall slightly on a bad report and could rally on a better-than expected report.