Wall Street is in mourning, but the ticker tape keeps rolling. Alan Greenspan, the maestro of American monetary policy, has passed away at the age of 100. The man who steered the US economy through decades of boom, bust, and irrational exuberance is no more.
Markets are wobbling, but not collapsing. The Dow Jones Industrial Average opened 200 points lower, but has since recovered somewhat. The bond market is a different story.
The yield on the 10-year US Treasury note has fallen 15 basis points to 4.25%, a classic flight-to-safety move. Gold is up, oil is down.
The dollar is mixed. Currency traders are trying to price in the Greenspan legacy, but it is a tough task. After all, this is the man who kept interest rates low after 9/11, inflating the housing bubble.
The man who said 'irrational exuberance' in 1996, only to then fuel the dot-com bubble with easy money. The man who became a folk hero in the 1990s, but a villain after the 2008 crash. The City of London feels it too.
The FTSE 100 is down 1.2%, led by banks and miners. The pound has weakened against the dollar and the euro.
Investors are jittery. They are looking for a signal from the Fed. Will it pause its rate hikes?
Will it resume quantitative easing? The Greenspan era was defined by freedom, deregulation, and the idea that markets know best. That ideology is now on trial.
The bottom line: Alan Greenspan was a giant. But giants cast long shadows. The real question is whether his ghost will haunt markets for years to come.
The answer, like the man himself, is complicated. Stay tuned.
