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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (30791)	10/8/1998 7:58:00 AM
From: flickerful	Read Replies (1) \| Respond to of 94695

gersh. i was dreaming and i woke myself up... something about pittsburgh style. flick

To: Gersh Avery who wrote (30791)	10/8/1998 8:05:00 AM
From: flickerful	Read Replies (2) \| Respond to of 94695

Greenspan warns on US economy financial times/ 8 october 98 Dollar plummets as Fed chairman spells out gloomy prospect for US, reports Gerard Baker in Washington Alan Greenspan, chairman of the Federal Reserve, gave a sombre warning yesterday that the outlook for the US economy had deteriorated significantly as a result of global financial turmoil. The Fed chairman's remarks, which hinted at further cuts in interest rates by the central bank over the next few months, came as the US dollar plummeted in foreign exchange markets. The dollar lost an unprecedented 10 yen in one day's trading yesterday as investors reacted to news of a possible breakthrough in the Japanese government's efforts to resolve the country's banking crisis. Mr Greenspan's comments also pushed the dollar lower as markets anticipated lower US interest rates. In his remarks to economists in Washington, Mr Greenspan said he had never seen anything like the events in the financial markets. Hopes that Asian "contagion" had moved into remission had proved wrong. The main threat to the US economy stemmed from the financial sector, he told the National Association for Business Economics. In the past two months there had been a large and sudden shift in investor sentiment away from risk in a way that seemed certain to damp economic growth substantially next year. "It's pretty obvious, I think, that the outlook for 1999 for the US economy has weakened measurably in the aftermath of the Russian devaluation and debt moratorium," he said. "We are clearly facing a set of forces that should be dampening demand going forward to an unknown extent. .. This is a time for monetary policy to be especially alert." Stock prices initially surged on Mr Greenspan's warnings. But as investors digested the full, gloomy message, equities gave up most of their early gains. By the close in New York, the Dow Jones Industrial Average was off 1.29 at 7741.69, having been more than 100 points ahead earlier. European stocks reacted badly to the dollar's decline, which also saw the US currency hit a 20-month low against the D-Mark. The DAX index in Frankfurt fell 2.9 per cent with leading exporters such as Siemens and Volkswagen hit heavily, while the broad Eurotop 300 index dropped 1.5 per cent. Last week the US central bank disappointed financial markets with just a quarter percentage point cut in its main target Fed funds rate to 5.25 per cent. The move was widely seen as insufficient to deal with the escalating impacts of the global crisis. Yesterday, Mr Greenspan spelt out his concerns. "The building sense of stability in international markets has been undermined as the belief that the Asian contagion had moved into remission has been proved quite wrong. "The result of this, as I am sure all of you are acutely aware by now, has been a very dramatic change of the risk profile of the world." But he acknowledged that current conditions in the broader US were still sound. "The truth of the matter is we've got an economy which as of now. . . is really still quite an impressive sight," he said.