What the Fed will say today

The Federal Reserve is expected to announce its plans for interest rates today. Supposedly, the stock market is on hold until the Fed speaks. But it is not even clear why stocks rallied 47 percent since March's S&P 500 low of 676, that the state of the economy has anything to do with it, and whether anything that the Fed says or does will make a difference.

In a TV interview last night, I said that stocks had been rising due to the actions of traders, not investors. There are two games that traders play that have been driving up stocks. One is so-called flash trading, where big institutions hide behind dark pools to anonymize their front-running of orders to major exchanges through super-powerful computers. The second is making bets on earnings outcomes and profiting from short-covering when those results turn out to be better than expected.