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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Lars who wrote (2882)	1/19/1999 12:23:00 PM
From: Proud_Infidel	Respond to of 15132

AMZN could do a stock swap for KMart and Barnes&Noble and Fortune Brands and still have money left over. This way they have a chace of making money<GGG>

To: Lars who wrote (2882)	1/20/1999 12:18:00 PM
From: Lars	Read Replies (2) \| Respond to of 15132

* Greenspan Warns of Possible Stock Market Decline * Updated 10.59 a.m. ET (1559 GMT) January 20, 1999 By Martin Crutsinger WASHINGTON — While calling the economy's current performance "outstanding," Federal Reserve Chairman Alan Greenspan expressed worries today that the high-flying stock market could be headed for a tumble that could spell serious trouble down the road. Greenspan said weakness in profits raised the 'possibility that the recent performance of the equity markets will have difficulty in being sustained' Greenspan, in testimony before the House Ways and Means Committee, said nothing to directly indicate whether the Fed would be changing interest rates any time soon. But his expressions of concern about the altitude of the stock market gave support to views that the central bank is not likely to rush to cut rates further unless global turmoil sends markets into a severe downturn such as occurred last fall. Greenspan's remarks today were his most extensive worrying aloud about whether prices had risen too high since his famous comments about "irrational exuberance" in December 1996, when the Dow Jones industrial average was nearly 3,000 points lower than it is today. Greenspan noted that stocks have been climbing into record territory this year and called this fact unusual, given that corporate profits, the underpinning of stock prices, have been weaker. He said this weakness in profits raised the "possibility that the recent performance of the equity markets will have difficulty in being sustained. The level of equity prices would appear to envision substantially greater growth of profits than has been experienced of late." Greenspan said a tumble in stock prices could quickly spillover into the real economy through what economists call the "wealth effect," the fact that consumers spend more when their net worth is rising and cut back when they face reversals. It has been robust consumer spending that in large part has kept the U.S. economy steaming ahead in the face of the severe global turmoil that began in Asia in mid-1977. "A decline in equity (stock) values, especially a severe one, could lead to a considerable weakening of consumer demand," Greenspan said. Greenspan's comments today marked his first appearance before Congress to review the economy since the central bank cut interest rates three times last fall in an effort to make sure that an extreme drop in stock prices following a widening of the global currency crisis to Russia did not push the U.S. economy into a recession. But Greenspan stressed today that the Fed's actions last year were not prompted by a desire to protect investors from a drop in stock prices, but rather to protect the overall economy from a downturn caused by a cut in consumer spending that could result from tumbling markets. In fact, Greenspan said some slowing in the U.S. economy this year would be desirable, given the rapid pace of recent growth that has pushed the nation's unemployment rate to a three-decade low. While that raises concerns at the Fed that tight labor markets could trigger inflation by pushing wages higher, Greenspan said this has not occurred, a fact he linked to higher productivity, the ability to turn out more products per hour of work. The global economic crisis threatened to flare anew last week when Brazil, the largest economy in Latin America, was forced to devalue its currency. "So far, markets seem to have reacted reasonably well to the decisions by the Brazilian authorities to float their currency and redouble efforts at fiscal discipline," Greenspan said. In September, Greenspan expressed concerns about the fallout from the decision of Russian authorities to default on billions of dollars in debt. That default triggered plunges in financial markets in the United States and around the world as investors feared the global crisis that began in Thailand in July 1997 had entered a new and far more virulent phase. Greenspan declared then that the Fed was ready to prevent the market turmoil from "really spilling over and creating some very significant difficulties for all of us." He followed that promise with three rapid-fire reduction in the central bank's federal funds rate, the last pushing it to 4.75 percent on Nov. 17. Most economists are looking for growth to slow markedly in 1999 as the drag from foreign turmoil finally begins to bite. But the slowdown has yet to occur and for that reason, economists don't believe the Fed will move anytime soon to cut rates. Talking about the need for the economy to slow, Greenspan said today, "Through the end of 1998, the economy continued to grow more rapidly than can be currently accommodated on an ongoing basis." He also said "some moderation in economic growth ... might be required to sustain the expansion."