Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: Oral Roberts who wrote (48266)	10/21/2003 10:06:03 AM
From: stevenallen	Read Replies (2) \| Respond to of 57110

Why Wall Street Didn't Hate Snow's Comments on Rates AHEAD OF THE TAPE By JESSE EISINGER Had Treasury Secretary John Snow's head-scratching comments to the London Times Monday been made by the widely mocked Paul O'Neill, the remarks would have left the markets foaming at the mouth. As it is, the markets are in a period of relative calm. Rates have stopped rising sharply. The dollar isn't plunging. The stock market is moving up. The economy is looking as if the long-awaited period of sustained expansion may be upon us. Mr. Snow departed from the usual Treasury secretary playbook by discussing the future direction of interest rates, declaring that he would be "frustrated and concerned" if rates weren't moving higher as the economy improved. He debunked the idea that the Fed doesn't raise rates during presidential election years. And he said that he expected "an average of about 200,000 new jobs a month" from the fourth quarter to the third quarter next year. Wall Street was sent initially astir, but more out of confusion than anything else. After all, Wall Street economists know firsthand that most predictions turn out to be wrong. But Wall Streeters wondered if Mr. Snow was doing more than forecasting. The comments "may have been some unintended hint of what the Fed's views are," says Miller Tabak's Tony Crescenzi. He expects the Fed will soon start commenting more favorably about the economy in its official statements. Then there was Mr. Snow's prediction about jobs. Such a forecast is predicated on solid economic growth and a decline in productivity growth rates. "It's reasonable to assume that [productivity growth] will moderate, but we are very careful to make any forecast because productivity has been doing such unusual things," says Goldman's Jan Hatzius, who predicts an average of fewer than 100,000 new jobs a month in the next four quarters. The issue with Mr. Snow's comments is that they didn't seem particularly astute. "What's the upside? He may turn out to be right; it's more likely to turn out to be wrong," says Mr. Hatzius of Mr. Snow's jobs prediction. Mr. Snow seems to enjoy testing the markets' patience. As his talks down the dollar, he denies talking down the dollar. At some point, Mr. Snow will need the markets with him. As forgiving of their own track record as investors are, if things go south, they won't be with his.