At the last FOMC meeting , “substantial” was inserted and comprised the sole change to the statement. I spent a little time spoofing on the spin that one word created in the bull camp and wrote about it here. If you remember, the bulls suggested that “substantial” meant a rate cut was on the way this spring. How did that work out? Now that we are no longer looking for 3 cuts during 2007 and the market is not expecting a rate cut this year, I wonder what the substantial word(s) of the day will be this time. Since mid-December’s meeting, oil has declined from $61 (then) to $50 (January 18th) to $58 (today.) The drop to $50 was substantial but the economy seemed to grow and show some mild inflation pressures. On one hand, oil declines spur growth and on the other hand, increases in oil restrain the consumer. Now that oil prices seem to be on the rise, it will be interesting to hear the Fed’s interpretation. As for housing (the other big issue from the last meeting), we have seen another mixed bag of results and comments from homebuilders during a period which saw the 10-year Treasury yield jump from 4.5% to 4.85%. I am not sure what word or words will make it into the statement today, but I am certain of one thing - the bulls will do their best to spin it. Just like their wrong interpretation last time, I am betting they’ll convince quite a few investors. As I wrote on Sunday, there seemed to be a PR campaign last week to convince everyone that it really doesn’t matter that we don’t get the rate cuts they told us were so necessary to fuel the market. It’s a no-lose scenario and all the bulls need are a few good words.