Whenever Alan Greenspan opens his mouth, all investors have to prick up their ears.
In the United States, when it comes to the influence on economic life, Greenspan is second only to the President's number two, and even, his sentence, can directly lead to the rise and fall of the New York stock index, thus affecting the world stock market of the hot and cold. 1987, in the then-President Reagan's nomination, Greenspan served as Chairman of the Federal Reserve, and from then on, whether it is the **** and the party is in power, or the Democrats manage the White House, he is in this seat a moment, a moment, a moment, a moment, a moment, a moment.
To Chinese businesses, Greenspan, with his dark-rimmed glasses and black suit, seemed to symbolize a coordinated and effective financial system. It is also true that Greenspan, since taking office, has been on high alert for inflation in the U.S. As long as the various economic indicators are overheating, he will make hints to raise interest rates, and even hike interest rates six or seven times a year at times, to cool down the overheated stock market; and once there is a recession in the economy, he stepped up to the plate and made speeches that hinted at interest rate cuts, throwing out pills of peace of mind to investors.
Alan Greenspan's "magic" (hot tracking)
By Xinjun Liao
The words of Alan Greenspan, chairman of the Federal Reserve, have always been regarded as the "golden rule" by Wall Streeters. Greenspan has been chosen as the most influential person on investment in 1999. However, the Wall Street people suffer, Greenspan's speech has always been ambiguous, as if the "heavenly book" generally difficult to read. After each Federal Reserve meeting, Wall Street analysts, economists are always digging in his remarks in the hard "cultivation", trying to find out from between the lines of some favorable or unfavorable to the market "traces".
But Greenspan has changed his style, and in his most recent public remarks, neither Wall Street analysts nor investors had to rack their brains to figure it out.
Speaking to bankers in New York last Tuesday, Greenspan hinted that the Fed would abandon its inclination to raise interest rates, saying that with the economy already partially off the rails, we have to be wary of the possibility that the overly cautious mood in the financial markets and the shrinking of financial assets could indicate or lead to extremely weak conditions in household spending and business spending. While he said the U.S. economy is not as dangerous as it was in the fall of 1998, he expressed some concern about signs of a marked slowdown in economic growth. At the same time, he urged banks not to tighten credit too much when growth slows.
He said it is no longer easy for U.S. companies to raise money in the stock and bond markets, and the possibility of paying down debt by issuing new securities is diminishing. The rising cost of corporate finance could constrain capital spending across the business community.
Greenspan pointed out that high energy prices are the most important reason for the current slowdown in U.S. economic growth. Since 1999, high energy prices have increased the energy costs of U.S. companies by 40%, but due to fierce competition in the market, companies cannot rely on price increases to offset rising energy costs, which leads to lower corporate profits.
Generally speaking, Greenspan is seldom directly for the market to cheer, his usual tactics is to use its "thin needle" to burst the market bubble. However, in his speech last Tuesday, he pointed out that the recent downturn in the U.S. stock market has dampened consumers' appetite for further spending. This just eliminates the Federal Reserve policymakers most worried about things, that is, too much consumer spending may trigger economic overheating. The Dow Jones index has fallen 8.2 percent since the beginning of the year, and the Nasdaq Composite Index has fallen 36 percent. In addition, he also pointed out that high-tech stocks now the decline is inevitable. The current downward spiral of telecommunications and other high-tech stocks largely reflects the inevitable process of survival of these industries, as the market began to draw more certain conclusions about which companies have long-term market competitiveness, and which do not.
Greenspan's statement that the Fed has realized that the U.S. economy is slowing down is certainly something Wall Street can only dream of, as it means that the Fed could change its rate-hiking home turf to neutrality after the December 19th Federal Reserve Open Market Committee meeting, and that a change in the Fed's stance would be a prelude to a rate cut.
Greenspan's speech is like to the U.S. stock market in recent months, especially the Nasdaq market fell miserably to play a "cardiac needle", investors are cheering, "male and female," a head of the stock market, the day The Nasdaq market, mainly technology stocks, ushered in the history of the most brilliant day, the Nasdaq Composite Index rose 274 points, closing at 2889.76 points, up as much as 10.48%. This is the index since the introduction of 1971, the largest single-day rise in points, but also the largest single-day rise. Previously Nasdaq's largest single-day gain was recorded on May 30 this year, a 7.94% increase. Also affected by the news, the Dow Jones industrial average rose 338.62 points, closing at 10,898.72 points, or 3.21%, the Standard & Poor's 500 index rose 51.65 points, closing at 1376.53 points, or 3.89%.
In the day of the performance of the more outstanding sectors are: due to interest rates are expected to be lowered, the response to interest rates sensitive financial sector performance is particularly outstanding, including JP Morgan, Citigroup, American Express and other blue-chip financial stocks to become a big winner, referred to as 3M Minnesota Mining and Manufacturing Company is the Dow Jones index is the largest stock, the stock rose 11% in a single day, and set a new record high for the year! of more than $118. Giants in the technology sector such as Intel, Microsoft, IBM, Hewlett-Packard, Cisco, and Nokia all performed strongly. In particular, the Nasdaq market, chip stocks, computer makers, phone makers, wireless device makers, computer peripherals, biotechnology sector have risen sharply, and even the scenery is no longer the network sector have also climbed.
Wall Street analysts pointed out that the stock market rebound can not be attributed to the results of Greenspan's speech, can only be said to be Greenspan's speech is well-intentioned, the choice of timing is more appropriate. Caused the stock market soared that day for other reasons: First, due to the previous Florida Circuit Court ruling rejected Vice President Gore's request to recount about 14,000 votes, so that the clouds of the U.S. election gradually lifted, so that the stock market's "certainty" has been enhanced to boost the popularity of investors. Second, the U.S. stock market, especially the Nasdaq before a period of decline is too large, in the technical indicators already have a strong will to rebound. These two factors as well as the fuse of Greenspan's speech together, the stock market did not not rise reason.
However, there are many analysts pointed out that it is too early to say that the U.S. stock market has bottomed out, especially the Nasdaq. Perhaps, from the subsequent days of the major indices to return to a small decline in the view of some of the clues. In any case, at this stage, Tuesday's sharp rise in stock indexes as a rebound seems more sensible.
International Finance Daily (December 11, 2000, page 4)
The New York-based Xinhua News Agency today said goodbye to the 18-and-a-half-year Greenspan era at the Federal Reserve, where 79-year-old Federal Reserve Chairman Alan Greenspan will be handed over the baton on January 31st, and will be succeeded by the former Chairman of the Council of Economic Advisers to the President of the United States, Ben Bernanke.
Since his inauguration on August 11, 1987, Greenspan has been sitting in the position of chairman of the Federal Reserve for 18 and a half years, is not a "four old", he has experienced during his term of office, Reagan, the old Bush, Clinton and Bush, four presidents of Wall Street, the U.S. economy and even the world economy. The impact on Wall Street, the U.S. economy, and even the world economy has been far-reaching.
He is a long-sleeved dance, in the fight against inflation and stimulate economic growth between the "elegant tightrope"
Lyle Granley, senior economic adviser to the Stanford Washington Research Group, who worked for the Federal Reserve, said: "Greenspan was one of the earliest economists to recognize the new economy, and he succeeded in convincing the United States of the importance of the new economy. One of the first to recognize the new economy, he succeeded in convincing his colleagues within the Fed to adopt a flexible monetary policy to support the continued growth of the new economy." According to Granley, Greenspan was a long-winded, "graceful tightrope walker" between fighting inflation and stimulating growth, and during his tenure not only controlled inflation and re-established price stability, but also ensured a relatively high employment rate.
CreditSights strategic research expert Kristen Steinke pointed out that Greenspan is always calm in the face of a variety of financial problems and emergencies, take the initiative. He successfully dealt with the stock market "Black Monday" in 1987, as well as the subsequent two gulf crisis and the 2001 "9-11" event. When the financial crisis originated in Asia in 1998 spread to Latin America and threatened the global economy, Greenspan decisively cut interest rates for three consecutive times in 10 weeks, creating the fastest rate of interest rate cuts in U.S. history, and successfully resolving the imminent financial disaster.
He made the U.S. economy grow at an average of about 3% per year, which was enough to make him famous
David Kelly, senior advisor at Putnam Investments, believes that during Greenspan's tenure, in addition to the two mild recessions in 1990-1991 and 2001, the United States saw the longest period of economic growth in history, and moreover, created in the Clinton years "Zero inflation" economic miracle in the Clinton era. Greenspan made the U.S. economy grow at an average of about 3% per year, with the average unemployment rate hovering at 5.5%. These have been enough to make his name in history.
Wall Street bankers also praised Greenspan's reforms in the transparency of the Fed's decision-making. Bill Davis, executive president of Hartford Investment Management, said, "Before the Greenspan era, the Fed's control of decision-making information was too strict and conservative, and it was Greenspan who brought greater transparency to the Fed."
He wasn't perfect, but still not the best Fed chairman in U.S. history
Yet while speaking highly of Greenspan's record, Wall Street also expressed dissatisfaction with some of his practices. David Kelley said the Fed has released too much information, making the market interpret its policies differently and be at a loss. In addition, Gerao too gentle to subordinates, subordinates in the media frequent appearances, revealing the Fed's next monetary policy mystery, so that the authority of the Fed and the effectiveness of monetary policy discount.
Kristen Steinke believes that Greenspan's monetary policy is generally successful, but not perfect, the recession of the early 1990s is related to its inappropriate monetary policy. In addition, Greenspan in 2001-2002, a series of interest rate cuts action is too large, just one year the U.S. federal funds rate from 6.5% to 1.75%, which makes the U.S. real estate sector a large number of bubbles. And once the house prices fell, the residents of the tightening of consumption, the U.S. economic growth will not be able to sustain the momentum. This is also left to the next Federal Reserve chairman of a difficult problem.
Moody's chief economist Mark Zandi and the United States famous economist Paul Krugman that Greenspan since 2001 to support President Bush's tax cuts, so that the United States has been a huge deficit is more serious, thus bringing the U.S. economy deeper internal injuries.
However, times make heroes. Over the years, Greenspan's modest, calm, bold image has been y imprinted in people's hearts. In the eyes of more people, he is still the best Federal Reserve Chairman in U.S. history.