August 04, 1999

The financial markets lack a clear sense of direction lately, participants seem a bit confused and are largely playing a guessing game. The origin of the confusion: Fed chief Alan Greenspans Humphrey-Hawkins testimony, during which the Chairman is required by law to tell Congress the state of economic and monetary affairs. The Chairman,s opinions on these issues are taken as gospel, particularly in the case of Greenspan. But his opinions on issues other than monetary policy are just that, opinions. How he feels about market valuations or whether we should have tax rate cuts are not part of his job description. They are only incidental to his job-to the extent these events affect the demand for money.

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