Hi Julie,
Before this move did the Nasdaq have the kind of drop we have seen this year?>>>
Not quite. From Mid July 98, we dropped approx 27% from a high of NAZ 2020 to NAZ 1480 (end of August 98). That was prior to the first cut in September 98.
And you are correct. The main reason was to stem a global recession, which was due in part to the Asian financial crisis. So you are correct that the environment was very different back then.
To some extent though, you could draw up an argument that the FED is trying to accomplish the same thing this time (or prevent it anyway), but the tables are somewhat turned because this time we are the instigators of a potential global problem. In 1998, it was Japan, Thailand, Malaysia, Indonesia, etc., that got the global recessionary wheels rolling. I hardly think that George W wants to be remembered as the guy who buried the world in a global recession. Funny how those vicious cycles bat back and forth huh?
Greenspan being the best technical trader around <g> had to rescue the stock market and consumers>>>
Wow....if that's the case then I like the guy even more! However, he has stated so many times in the past that the FED does not target specific levels in the stock market and that they don't gauge monetary policy based on the stock market. I really believe this to be the case too.
Typically the FED and in particular AG has used the NAPM index as an important guide for monetary policy. And strangely enough that index has recently fallen to 61, and I believe the last time it was near that level was prior to the series of rate hikes that started in 1999. To a big extent, that number is a byproduct of consumers spending habits, so I guess you could say that Uncle Alan is looking out for us. Somehow, I don't think his main priority will ever be the stock market, especially the Nasdaq :-(
But.....one thing is true:
Consumers have become the economy, fueling the growth.
Best,
-B |
