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 : Evaluating Rumors and News Along With T/A and F/A -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (66)	9/23/1998 8:14:00 PM
From: Capt	Respond to of 141

Sorry about the Greenspan link...here's the story : Greenspan expresses growing worries, offers no immediate rate cuts 2.50 p.m. ET (1851 GMT) September 23, 1998 By Martin Crutsinger,ÿAssociated Press WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan said today a widening foreign financial crisis will require policy-makers to be "especially sensitive to the deepening signs of global distress'' but he stopped short of promising any immediate reductions in U.S. interest rates. In widely anticipated testimony, Greenspan told Congress there was no doubt the currency crisis that began 14 months ago in Thailand has entered a new "more virulent phase'' with the collapse last month of the Russian economy. While indicating that Fed policy-makers were watching developments closely, he gave no indication in his prepared remarks that they were prepared to reduce interest rates when they meet Tuesday. Wall Street began the day strongly with the Dow Jones industrial average up more than 100 points immediately after the opening bell and investors bid prices higher still after Greenspan's remarks were released at midafternoon. Investors viewed Greenspan's expressions of growing concern about the global crisis as a further evidence that rate cuts are on the way. Private economists believe that growing signs of Asia's impact on the U.S. economy will force the Fed to cut interest rates before the end of the year, but Greenspan's remarks seemed to signal that further evidence of a U.S. slowdown will be needed for the central bank to act. "With few signs that the financial crisis that started in Asia last year has subsided, or is about to do so, policy-makers around the world have to be especially sensitive to the deepening signs of global distress which can impact their own economies,'' Greenspan told the Senate Budget Committee today. Hopes for a cut in interest rates had been heightened by comments Tuesday by William McDonough, president of the New York regional Fed bank. "The balance of risk has shifted from one of concern about inflation to one of concern about inadequate growth,'' said McDonough. In his comments today, Greenspan agreed that the threats to the U.S. economy were increasing, noting in particular big declines over the past month in stock prices, but he said that so far all the market turmoil has not "produced any significant weakness in the American economy as a whole.'' Greenspan also noted that labor markets in the U.S. economy remain tight and hourly compensation is continuing to grow more rapidly, but he said there is no evidence yet that inflation is getting out of hand. And he cautioned that "looking forward, the restraining effects of recent developments on the U.S. economy are likely to intensify.'' Greenspan repeated remarks he made in September, that the increasing risks to the U.S. economy had prompted the Fed in August to change its policy directive from one leaning toward increasing interest rates to fight inflation to a neutral stance. And since that time, Greenspan said today, "Deteriorating foreign economies and their spillover to domestic markets have increased the possibility that the slowdown in growth of the American economy will be more than sufficient to hold inflation in check.'' In his Sept. 4 speech at the University of California at Berkeley, Greenspan said: "It is not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress.'' Those comments and the promise they offered of rate cuts down the road were enough to boost the Dow Jones industrial average by 381 points, its biggest one-day point gain ever. But last week, Greenspan sent markets in the opposite direction when in an appearance before the House Banking Committee he deflated expectations of coordinated interest rate cuts among the world's seven largest economies. His comments sent the Dow plunging the next day by 216 points following huge drops in Tokyo and other overseas markets because of disappointment that the Fed would not soon act. Lower U.S. interest rates would help a number of countries struggling to defend their currencies by lowering the value of the U.S. dollar on global markets. The lower U.S. rates would also bolster global confidence by assuring foreign businesses that the Fed stood ready to insure that U.S. growth would continue to serve as an economic engine for the rest of the world. --------------------------------------------------------------------------------

To: Wayners who wrote (66)	9/23/1998 8:23:00 PM
From: Capt	Read Replies (1) \| Respond to of 141

Same Speech much different headline and view later in the day: Greenspan Signals Fed Ready To Cut Key Rates . 7.36 p.m. ET (2337 GMT) September 23, 1998 WASHINGTON - Federal Reserve Chairman Alan Greenspan signaled Wednesday he may push for a cut in key U.S. interest rates next week to prevent the world's top economy from being dragged down by mounting global turmoil. In eagerly awaited testimony to U.S. lawmakers, Greenspan said that even though the U.S. economy was still robust, the situation abroad had deteriorated considerably since last month and warned that things might get worse before they get better. "I do think that we have to bring the existing instability to a level of stability reasonably shortly to prevent the contagion from really spilling over and creating some very significant kinds of problems for all of us,'' Greenspan told the Senate Budget Committee. "We know where we have to go,'' he said, adding that he was not at liberty to speak for the ten other voting members of the Fed's policymaking Federal Open Market Committee (FOMC), which next meets Tuesday to deliberate monetary policy options. Greenspan's unusually candid remarks sparked a rally in financial markets around the globe as investors breathed a sigh of relief over what they read as a sign that Greenspan is ready to take the lead in battling the global financial firestorm. "I don't think he could be more aggressive without completely preempting the other members of the FOMC,'' said Dana Johnson, head of research at First Chicago NBD. "I have almost no doubt they'll move next Tuesday.'' The Dow Jones industrial average index of key U.S. stocks closed 3.26 percent higher. Markets in crisis-torn Latin America also surged - the key stock index in Brazil jumped 10.98 percent, and Argentinian stocks closed up 8.23 percent. In his prepared testimony, Greenspan said global conditions had deteriorated markedly since the FOMC last met in August, when it had seen the risks to the U.S. economy as "balanced.'' "Since then, deteriorating foreign economies and their spillover to domestic markets have increased the possibility that the slowdown in the growth of the American economy will be more than sufficient to hold inflation in check,'' he said, giving added emphasis to what was his clearest hint yet that he is ready to make the case for a rate cut next Tuesday. Greenspan, noting that the global turmoil was "more than sufficient'' to hold U.S. inflation in check, pointedly warned policymakers in other major economies that their countries could not expect to remain unaffected from the crisis forever. "There is little evidence to suggest that the contagion has subsided,'' he said. "It is just not credible that the United States, or for that matter Europe, can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress.'' Top European central bankers have over recent days stressed they were reluctant to cut interest rates simply in response to the global crisis, saying the situation in their domestic economies did not warrant such a step. Investors around the globe have been hoping that at least the Fed would set a signal and cut rates soon to discourage the growing flight of investor capital into the relative safety of dollar-based assets, which has slowly but steadily drained the lifeblood from many emerging markets. Greenspan first opened the door to a rate cut in a speech earlier this month when he warned that global turmoil was likely to put a damper on U.S. growth in the months ahead. On Tuesday, New York Fed President William McDonough - a close confidant of Greenspan - said slower growth now posed a greater danger to the U.S. economy then higher inflation. The Fed has held back from cutting rates since March of last year because of tight U.S. labor markets that it feared may fire up inflation. The key federal funds overnight rate has been stuck at 5.5 percent ever since. The last time the Fed cut official interest rates was in January of 1996. Greenspan said so far the crisis had not put a major strain on the U.S. economy and noted the job market was still strong. "However, looking forward, the restraining effects of recent developments on the U.S. economy are likely to intensify,'' he said. And, in response to a question, he later added that the U.S. economy was "beginning to feel the raindrops'' from the storm clouds hanging over ailing Asia. The turmoil had prompted stock prices in the U.S. to decline and banks to be more cautious in their lending, two further factors likely to rein in U.S. growth, he said. "He's telegraphed his message,'' said Lynn Reaser, chief economist at NationsBank Private Client Group in Jacksonville, Fla. "The Fed will be acting preemptively on the view that there will be much stronger effects of the international slowdown than previously thought.''