BOSTON (CBS) – Panicky investors got an early Christmas present Tuesday, a modest gain by the Dow after its worst December start in decades.
“Wall Street wants information,” says Jonathan Corpina of Meridian Equity Partners. “What are the ground rules? What is it going to look like? And Wall Street can adjust from there.”
But reliable information and the market stability it can provide are in short supply these days, thanks in part to political leaders in Washington and around the world who don’t quite seem to have a handle on things.
“We’ve got uncertainty in spades right now,” notes CBS financial analyst Mellody Hobson, pointing to a range of global political turmoil roiling the markets.
“Will we have a government shutdown on Friday? No one knows. Let’s go to the UK and Brexit – how are they going to leave the European Union? We’ve got Macron’s troubles in France and we’ve got this trade skirmish. All of that uncertainty is weighing on this market,” she says.
But the man behind the trade war is blaming the Federal Reserve for a string of recent interest-rate hikes after years of cheap money, tweeting Tuesday, “I hope the people over at the Fed will read today’s Wall Street Journal editorial before they make yet another mistake,” a reference to the newspaper’s call for a pause in those rate hikes.
But to former Fed Chairman Alan Greenspan, the issue isn’t so much reckless borrowing to leverage investments as it is the building of our boom on shaky ground. “It’s not the leverage per se. It’s really the leverage which occurs in the context of the toxic asset.”
Greenspan knows a little bit about toxic assets. Critics say his easy-money policies at the Fed helped fuel the real-estate and dot-com speculation that crashed the economy a decade ago, as feckless politicians looked on.
If history is repeating itself, as he seems to be suggesting, better buckle your seat belts.