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Strategies & Market Trends : Roger's 1998 Short Picks
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To: McNabb Brothers who wrote (17127)1/20/1999 12:14:00 PM
From: Kailash  Read Replies (1) of 18691
 
Hank -

This is no doubt true, so there may still be net inflows into the market. Here's a snippet from Greenspan's talk:

Washington, Jan. 20 (Bloomberg) -- Federal Reserve Chairman Alan Greenspan suggested U.S. stock prices may be too high even though he acknowledged the U.S. economy is rolling along with few signs of the slowdown Fed forecasters expect.

"Though the pace of economic expansion is widely expected to moderate as 1999 unfolds, signs of an appreciable slowdown as yet remain scant," Greenspan told the House Ways and Means Committee.

The good economic times could be lulling investors into a trap, Greenspan suggested. The rebound in stock prices in the last three months leave them at levels that "would appear to envision substantially greater growth of profits than has been experienced of late," he said.

This falls a little short of "irrational exuberance" but it's in the same league. He also speaks as if earnings mattered, old-school as he is...

Edit - an economist says what the Fed doesn't:

"The Fed is concerned that there is a bubble developing," said Paul Kasriel, an economist at Northern Trust Co. in Chicago. "The Fed will not raise rates in order to prick the bubble. By the same token, it's not going to cut rate until it is sure that the economy is slowing, and not to just to 3 percent but to 2 percent."

Kailash
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