Hi Jimmy
Did you listen to Alice R's interview??? and was it on CNBC, by CNBC reporters???
Was she jawboning???
EDIT----jIMMY HER'S THE TEXT!!!!!! Not bad.......
US stock prices not necessarily "bubble" --Rivlin
NEW YORK, May 6 (Reuters) - Federal Reserve Board Vice Chairwoman Alice Rivlin said on
Wednesday it was unclear whether the U.S. economy had felt the full impact of the Asian crisis or
whether current U.S. stock prices represented a financial ''bubble.''
Rivlin, in an interview with the financial cable television network CNBC, said it was ''not clear
whether the biggest impact... (of the Asian crisis) has hit us.''
Asked if lofty U.S. stock prices were a concern for the Fed, Rivlin said it was ''hard to define a
bubble until after it bursts.'' She acknowledged the high stock price valuation was ''certainly cause
for concern... not necessarily a bubble.''
Rivlin said the notion that rising U.S. stock prices may be more concerning to the Federal Reserve
than inflation in goods and services was ''reasonable.''
''These (stock) values are hard to justify unless you're very optimistic about future earnings. The
stock market is outdoing itself,'' said Rivlin, who added, ''But that doesn't mean there's anything the
Federal Reserve necessarily needs to do about it.''
Rivlin agreed with New York Fed President William McDonough that the U.S. has achieved price
stability, but also that the Fed must be vigilant against inflation.
''I'm extremely pleased with the inflation...that doesn't mean that inflation couldn't heat up in the
future. We have tight labor markets and an economy that is growing strongly.''
The Fed vice-chair said she knew of no talk at the Federal Reserve about using tools other than
interest rates -- such as higher investor margin requirements -- to cool the economy.
''(Higher margin requirements) would only make sense if one thought that A: the stock market was
in some sense was out of control and B: that was because of borrowed money and the latter is
certainly not clear,'' Rivlin said.
She said Japan's economy remained a near-term concern but its outlook was improved in the longer
run. Japan is moving to stimulate its ''economy which is in recession and they need to face up to
structural problems with financial system,'' Rivlin said.
Back to the U.S. economy, Rivlin noted that there were some indications that second-quarter
growth may be slower than the first due to an extended impact from Asia's crisis.
''The thing to watch are the trade numbers because we've already seen signs of the impact of Asia in
the trade numbers but they could easily get worse ... that slows the economy.''
Rivlin described the current U.S. economic stance as a ''balancing situation'' with the Fed looking at
''what the latest statistics are'' and getting additional input from the regional bank presidents.
She would not elaborate on her position on U.S. monetary policy.
Related News Categories: US Market News, currency, international, options
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