Word: feds
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...very grim indeed. In any case, stocks slid on frenzied volume all morning - the Dow was off 100 and the NASDAQ 50 by noon. In times like these, when we're still waiting for those first six cuts to show up on the economic radar, bearishness from the Fed is not exactly what we've been looking...
...even went so far as to say that while "the risks would seem to remain mostly tilted toward weakness in the economy," he saw "no evidence" of inflation. That's the other half of the equation - the green light for the Fed to cut rates into a slowdown without fear of stagflation. And Greenspan even took this Fed boilerplate up a notch, expressing what sounded like frustration that despite the Fed's six rapid-fire cuts in short-term rate targets, "most long-term rates have barely budged." Translation: Come on, bond market - I don't see inflation...
...Using the first part of his semi-annual testimony before the House Financial Services Committee as a sort of between-the-meetings preview of the FOMC's August 21 get-together, the Fed chairman did very cautiously indicate that the deterioration of the U.S. economy might be starting to slow down - and might even start to reverse itself by early next year. But he as much as shouted that last meeting's deceleration of the rate-cut regime to 25 basis points (instead of the usual 50) was almost certainly temporary...
...Greenspan speak so loudly? Well, it's a long way to the next Fed meeting, and it's been a while since the last one. The FOMC evidently figured it was time to give a little guidance lest anyone get the wrong idea that the last meeting's change in policy - unaccompanied as it was by any change in the tone of the Fed's statement - was anything but a clumsy compromise with some inflation-fearing regional bank presidents...
...sometimes you get the feeling he just wants to talk. The king of Fed-speak is speaking plainer and plainer these days - rarely has Greenspan's congressional testimony been so transparent as it was Wednesday. Certainly his customary subtlety must seem a less necessary precaution when the markets are immersed in their own problems - particularly this week, as some 1,500 earnings reports compete with Greenspan for prominence on Wall Street's list of designated tea leaves. But there's something almost plaintive in the way the Most Famous Fed Chairman in History keeps recounting his latest bout with...