Yes the speech appears to be a hit but was it because it was good or because it wasn't bad. The way I read it, he started off saying we could be in a new pair of dimes <g> then follows up by saying it won't go on forever. I put the most emphasis on his closing remarks as I post here but darned if I can decipher this greenspeak....
>>>>>...The measurement of real yields, that is, nominal interest rates less expectations of inflation over the maturity of a debt instrument, is inevitably imprecise. It depends, of course, on estimates of inflation expectations, which are very difficult to accurately pin down. But judging by yields on U.S. Treasury inflation-indexed securities, the real riskless interest rate has risen about half a percentage point for ten-year maturities since late 1997. Private long-term real rates have apparently risen even more. The spreads of corporates against Treasuries have widened significantly for investment-grade and, especially, high-yield debt over this period. As a consequence of these higher real interest rates, the ratio of net worth to income for the average household is already lower than it was earlier this year.
We do not have enough experience with technology-driven gains in productivity growth to have a useful sense of the time frame in which market pressures contain demand. Moreover, it is not clear as yet how much cumulative impact the rise in real long-term interest rates over the past two years will have on future demand.
Going forward, the Federal Reserve must monitor not only this response, but also the evolving capacity of our economy to meet higher levels of demand. Maintaining balance between these forces will be essential to preserving the stable price environment that has provided a firm foundation for this period of extraordinary innovation and progress in the U.S. economy. <<<<<<<
Does this mean that they need to close the gap or that they are just watching and waiting?????????
EDIT - Note that the cbs site also caught thatthe market correction was helping to contain inflationary pressure since people were feeling less rich the last few months. If we rally hard, what do they think he will do. Duh, it ain't hard to figure out, but you won't hear CNBC say it.
TIA and Good Luck,
Lee |
