Word: greenspans
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...Tuesday - at one point it was down more than 500 - concerns heightened about the fate of the U.S. economy. A 9% downdraft in Chinese stocks earlier in the day triggered the selling on Wall Street, while some downbeat economic news and an unexpected warning from an old bogeyman, Alan Greenspan, threw a scare into investors...
...Alan Greenspan, Bernanke's august predecessor, this week painted a gloomier picture, predicting a slowdown late in 2007. Speaking via satellite link to a business conference in Hong Kong, he declared, "When you get this far away from [the last] recession, invariably forces build up for the next recession, and indeed we are beginning to see that sign." He added: "For example in the U.S., profit margins ... have begun to stabilize, which is an early sign we are in the later stages of a cycle...
...Whipsawed by the contradictory views, investors who had bought stocks on Bernanke's optimistic remarks sold them on Greenspan's dour pronouncements, taking Wall Street into its biggest one-day drop in three years, capping off five consecutive day of losses...
...those who view things from Greenspan's perspective, there are worrisome indicators. Orders for durable goods - covering everything from jet engines to computers, as well as washing machines and other household appliances - fell more than forecast last month, the Commerce Department announced, a sign of ongoing weakness in manufacturing. The 7.8% decline was the biggest since October. Another important indicator of business spending, orders for nondefense capital goods not including aircraft, fell 6%, the third drop in four months...
...reacting differently to the prospect. In Frankfurt, the European Central Bank is continuing to raise interest rates - the next hike is widely expected later this month. In Washington, meanwhile, the new Federal Reserve chairman, Ben Bernanke, has ended the series of rate increases introduced by his predecessor, Alan Greenspan, and Wall Street has been anticipating the start of a period of cuts as the U.S. economy loses momentum. This transatlantic divergence is pushing the dollar down. (Note, however, that Bernanke sounded a hawkish note in a speech last week, saying that inflation remained "uncomfortably high" - an indication that...