*OT* GV- What's your current take on the Fed's view of all this? Are they totally agnostic to the worst Naz drop, likely in Naz history? If they were worried about the effect of the Naz zooming up, shouldn't they all be (also, perhaps not equally) concerned about a sudden drop?
Even though we are "only" back to Oct. '99 levels on the Naz, several of the other growth drivers for the economy are worse/weaker (than in Oct. '99): 1) Fed has drained a lot liquidity from the system, 2) Core rates much higher than last October, 3) Europe's growth has been stopped hard/Euro struggling, 4) Japanese recovery stagnent, and 5) Technology, the main driver of economic growth as of late, is showing slowing...for sure, at these Naz levels, real estate prices are going to be tanking in many areas...
The issue, as I see it, is that the Fed is worried about tight labor markets...but we all know that unemployment is the last indicator to turn around (statistically)...everything else collapses 1st...so if you are a "forward-looking institution", it would seem "behind-the-curve" to wait until you see movement in "employment numbers"..
The Fed is also worried about energy, but should realize that Fed rate hikes/stance can do little to change energy prices/inflation...
If the economy does not slow down as the Naz goes from 5000+ to 3000, then, intuitively, the wealth effect never existed anyway...That wouldn't seem logical...
So, If the Naz is at 2800 on Nov. 4th, and you are Alan Greenspan, what would you do? Do you go to a neutral bias? Or do you not worry about it?
BTW- Interestingly, if the Naz stays down for the next few weeks, it might be just enough for Bush to win..who would have thunk it? (that the market would be the key for Bush?) |
