Re: "..plenty of hawkish comments .. but the market does not care..." + the Bloomberg take:
Agree on Greenspan speech. Apparently, the market wants to read the words wearing rose colored glasses (right now). Hence the futures overreaction.
Frankly, I still think there is a better than even chance of a rate increase at the Nov. FOMC meeting. Still some time for more data to be digested (& plenty of time after Halloween for the rubber chicken circuit Fed guys to spin a negative web & whipsaw the market to the downside).
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Summary/excerpts of some of his speech:
Greenspan said he saw no evidence that productivity gains are about to slow
or disappear, but if they did, the effect on the economy in the medium term
could be "profound." If at that point, a tight labor market causes wages to rise,
he said, the productivity gains may be too weak to hold down inflation. "As a
consequence, unit costs would likely rise, pressuring profit margins and
prices."
Greenspan also said the growing U.S. current account deficit is a potential
obstacle to long-term price stability. For now, he said, the country has
managed to meet the demand caused by rapid economic growth by importing
goods. Those imports, in turn have been financed by ample capital inflows, he
said. But that can't last forever.
"For the recent past, direct foreign investment inflows have almost matched
the total current account deficit," he said. "But a continued widening of that
deficit could eventually raise financing difficulties, ultimately limiting import
growth."
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...and from Bloomberg:
bloomberg.com
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I think the following statement is a good summary of his speech:
>Federal Reserve Chairman Alan Greenspan on Thursday hailed a technology-led U.S. economic expansion marked by strong productivity
gains but insisted the pace of growth must slow.< |
