Greenspan: Investors Are Wrong

By John S. McClenahen U.S. Federal Reserve Board Chairman Alan Greenspan has a tough sales job ahead of him when he testifies to Congress on July 16, contends Maury Harris, chief U.S. economist at UBS Warburg LLC, New York. "He must convince markets that indicators of real activity -- such as commodity prices, factory gauges, mortgage applications, durable orders and retail sales -- have the economic story right and that the stock market has it wrong," says Harris. Some near-term federal funds future contracts suggest that Greenspan and his colleagues on the Federal Open Market Committee now might ease short-term interest rates at their next meeting on Aug. 13. But Harris, who has forecast a tightening of the money supply in November, discounts the possibility of an easing next month.

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