Word: baumohl
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Dates: during 1990-1999
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This time, it seems, he was warning us about irrational panic. "Greenspan knew about the Producer Price Index numbers ahead of time," says TIME senior economics reporter Bernard Baumohl, referring to the big scary inflation number that ? along with Alan Greenspan?s own Thursday night speech about an "asset bubble" ? threw the markets into an early-morning tailspin Friday. "He warned about wild fluctuations because he knew how the market would react to the bad news about producer prices, and his role is to warn investors that an adjustment in stock prices could come quickly...
...Friday morning and sold stocks like so many hot potatoes. The Dow shed over 200 points in oh, the first 15 minutesof trading after the bell, with the NASDAQ following suit. But an hour later, the sell-off had screeched to a halt. Despite Greenspan's hint, says Baumohl, investors had overreacted again. "That producer-price number is probably more of a spike than a trend. Oil prices have probably peaked, and gains in productivity will probably help companies absorb this increase rather than passing it on to consumers. Don?t expect a similar increase in the Consumer Price Index...
...tightening and sending a recently resurgent Dow into an instant 100-point mini-tailspin (thus smothering an earlier rally and ending the day even). "It?s a clear signal that the bank is concerned that the economy isn?t slowing down fast enough," says TIME senior economics correspondent Bernard Baumohl. "Consumer spending hasn?t slowed enough. The world economy continues to pick up. There?s no significant inflation yet, but it apparently bears watching...
...Alan?s cautiousness set us up for another black autumn? Baumohl doubts it. "The markets had factored in a no-hike with a neutral bias, so this was a sell-off on the surprise," he says. "But when they realize that no hike is still no hike, they?ll get over it." They?ll have time ? Baumohl expects the Fed to stand pat on the bias all the way until spring, thus making sure there?s plenty of money lying around in the credit markets for any Y2K foofaraw. Of course, unjustified fretting is always a possibility...
Moved PermanentlyMoved PermanentlyFortune Investor DataThese bears don?t look like man-eaters. But it?s no aberration, either - the breeze of prosperity is simply blowing offshore for a while. "If you look at the chart, the U.S. stock market hasn?t really done much since April," says Baumohl. "Investors here are looking at the beginnings of a recovery in Asia and Japan, and suddenly they feel very overweighted in dollar assets." That means dollars and U.S. equities are getting dumped for yen and Japanese ones. If it keeps up, the Dow could easily dip below that vaunted 10,000 sometime...