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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Alan Whirlwind who wrote (6130)	7/21/1998 9:16:00 PM
From: MrGreenJeans	Read Replies (1) \| Respond to of 42834

Financial Times, Wednesday, July 22nd This article is from the Financial Times, the Lex Column, it is like the Heard on the Street Column in the WSJ but always much tougher:ÿ <<Lexÿ Greenspeak It is time for Alan Greenspan to say what he means. The Federal Reserve chairman yesterday sounded more worried about inflation, and consequently more in favour of raising interest rates, than for many months. But this is still a hawk with clipped wings. Each gloomy comment was balanced by optimism on the US economy's grand fundamentals. Mr Greenspan's problem is that while his instincts tell him inflation may be about to resurge, the numbers do not (yet) show it. This may be true for consumer prices. But look at asset prices instead and there is massive evidence of inflation, particularly in liquidity-driven equities. Mr Greenspan is clearly not comfortable with the stock market's current level. He warned yet again yesterday that investors appeared to expect rampant profits growth into the distant future, which required heroic assumptions. But he seems unsure how to react. This may be, in part, because the stock market has helped fuel the current prosperity; also, perhaps, because his comments on "irrational exuberance" 18 months ago were so roundly ignored. But with US stocks now 60 per cent higher, Mr Greenspan should stop equivocating. If he is truly worried about share prices, he should say so explicitly in an attempt to talk the market down gently. If that fails he must follow through and raise rates. A small to middling correction now would be a lot better than a crash later. >>