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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 671.910.0%Nov 14 4:00 PM EST
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To: Lee Lichterman III who wrote (29781)10/15/1999 1:53:00 AM
From: Eric Wells  Read Replies (2) of 99985
 
>>Just echoing the rumor I saw.

Regarding the rumor that Greenspan's statements this evening might have been geared toward muting an optimistic market response to a possible low PPI number tomorrow - I would tend to not give such a rumor much credence, as I imagine that Greenspan most likely wrote his speech weeks ago, prior to any of the final PPI data being known. The rumor also assumes that Greenspan has access to the PPI data before it is released - do we know this for certain (where does the PPI data come from anyway - the Commerce Dept?).

If you think about it, there are many potential ways to spin rumors around Greenspan's words:

1. Perhaps tomorrow's PPI number will in fact be high, yet Greenspan has watched past high PPI numbers be ignored by the market - and so he decided to instill fear to ensure tomorrow's number is not ignored.

2. Perhaps Greenspan is trying to instigate a market correction now, before the next Fed tightening - if the market corrects now, on PPI news, then there is less of a likelihood that the correction will be blamed on the Fed in November when the next hike comes.

3. Perhaps, Greenspan would like to see a correction before we get too far into the holiday season - making people poor during the holidays would only help to bolster a negative public impression of the Fed.

4. Perhaps Greenspan plans to resign soon - and well, he would like to make sure the market corrects while on his watch - otherwise the mania could go on for years.

I don't believe any of the above. Because, as stated, I believe that Greenspan wrote his speech weeks ago. I'm sure Greenspan is well aware of the potential impact his words will have on the market - but I don't think his intentions were to offset any sort of response to the PPI.

Thanks,
-Eric Wells
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