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Greenspan to Investors: “Run for Cover”

The former Federal Reserve chairman famously warned more than two decades ago about "irrational abundance" in the stock market does not see stock prices go any higher than they are now. "It would be very surprising to see It's so stabilized here, and then take off," Greenspan said in an interview with CNN Anchor Julia Chatterley. He added that the markets could still move on – but warned investors about that the correction would be painful: "At the end of that run, run for cover. " Jitters coming as the Federal Reserve's Interest Rate Committee is preparing to meet Tuesday and Wednesday. They are expected to raise interest rates for the fourth time this year &#821 1; even though investors will also cheer for clues about their plans for 2019. Fed's latest protocol November meeting means that policy makers want to take a more flexible approach next year and add investor anxiety. On Monday, the S & P 500 closed its trading day at its lowest level since October 2017, while the Dow Jones Industrial Average dropped more than 600 points at one point of the day. "Volatility is a function of how we speak, think and feel – and it's variable," he said. "If you can not in any way radically change human nature and how we respond, then it's always you get and have gotten. You must expect it to understand how the market works. " In recent weeks, President Donald Trump has repeatedly revised goals against current…

The former Federal Reserve chairman famously warned more than two decades ago about “irrational abundance” in the stock market does not see stock prices go any higher than they are now.

“It would be very surprising to see It’s so stabilized here, and then take off,” Greenspan said in an interview with CNN Anchor Julia Chatterley.

He added that the markets could still move on – but warned investors about that the correction would be painful: “At the end of that run, run for cover. “

Jitters coming as the Federal Reserve’s Interest Rate Committee is preparing to meet Tuesday and Wednesday. They are expected to raise interest rates for the fourth time this year &#821

1; even though investors will also cheer for clues about their plans for 2019. Fed’s latest protocol November meeting means that policy makers want to take a more flexible approach next year and add investor anxiety.

On Monday, the S & P 500 closed its trading day at its lowest level since October 2017, while the Dow Jones Industrial Average dropped more than 600 points at one point of the day.

“Volatility is a function of how we speak, think and feel – and it’s variable,” he said. “If you can not in any way radically change human nature and how we respond, then it’s always you get and have gotten. You must expect it to understand how the market works. “

In recent weeks, President Donald Trump has repeatedly revised goals against current President Jerome Powell, a former investment bank, whom Trump himself was appointed last year. close market maker who has slammed his presidency on the state of the economy has accused Powell of trying to suppress him politically by slowing down the economy.

He blamed Fed for the market route in October, calling Fed out of control and suggesting Powell seemed to enjoy He also called the Fed a “much bigger problem than China”, referring to a trade war between the two countries.

A white house manager said that Trump continues to express his own concern over the markets, although he publicly insists that The economy is strong. Before the markets opened on Tuesday, Trump again tweeted a new warning to Fed officials to s beware of their interest rate plans, while encouraging decision makers to read an editorial Wall Street Journal “before making another mistake.”

“Do not let the market become more illiquid than it already is,” drummed Trump. “Stop 50 B: know the market, do not just go on with meaningless numbers. Good luck!”

It was the second day in a row Trump tweeted at Fed’s forthcoming meeting. On Monday, Trump trumped it was “unbelievable” that Fed considered a price increase despite low inflation and a strong dollar.

But Greenspan, who was first appointed to the Fed by President Ronald Reagan and became the longest serving chairman remaining in his role in the George W. Bush administration, said that an important driving force in market volatility has been the pronounced increase of real long-term interest rates.

The former chairman also warned that the United States may be ready for a period of stagflation, “a poisonous blend” when the economy suffers from high inflation and high unemployment. The last time the country experienced such an episode was in the 1970s and early 1980s.

 Trump said he expressed irritation over Wall Street's negative review of the China Agreement

“How long it lasts or how big it will be, it’s too early to tell,” said Greenspan. “We know when we get on top of it.”

However, other economists have expressed concerns about the risk of raising interest rates now, even at the risk of creating the impression that the president had bought their own politicians – whose independence from political pressure is intended to ensure the markets that their decisions are free from political concerns.

“I’m in the rare position to keep in mind that Fed would not raise prices, but it should not listen to the president, which is a tough position,” says Nobel Prize economist Paul Krugman on CNN’s Quest Means Business on Monday. is a pretty good case not to raise prices now. But not raising interest rates of this kind would look as if they allowed themselves to bully. “

However, Greenspan dismissed the idea that the Fed could cry to political pressure by the president.

” I have not seen any evidence “said Greenspan, who said during his schedule, he had figuratively” earmuffs himself. “Adding he never remembers a time when someone had wished he had raised prices.

” We listen – sometimes respectful, sometimes not ” he said. “But do we change politics?” No. “”

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