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CNN Live Today
Wall Street Worries Continue
Aired July 16, 2002 - 12:37 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Economic optimism from the head of the Federal Reserve: Alan Greenspan announced today that, despite September 11 and all the corporate financial fiascoes, the economy will bounce back. Fed experts say growth is expected between 3.5 and 3.75 percent this year.
If the likes of Alan Greenspan can't keep the bears at bay for more than a few minutes, what hope is there?
Let's ask Allen Wastler, managing editor of CNNmoney Web site -- hi, Allen.
ALLEN WASTLER, MANAGING EDITOR, CNNMONEY WEB SITE: How you doing, Kyra?
PHILLIPS: All right, I don't know about you. I'm getting those statements. And my friends at the bank said all those statements have been going out and people have been flooding the stock broker phone lines.
WASTLER: Yes, and you are going, "No, no, no, what did I do?"
PHILLIPS: Banging your head up against the wall.
WASTLER: Right.
Well, you know, the market actually today -- it may not look like it right off the bat, but the markets actually -- this isn't too bad, OK? Alan Greenspan, now, some people argue he is more powerful than President Bush, really, because he controls the cost of money. He will affect everything, from mortgage rates, to how much you pay for your car, to what your credit card bills are going to look like down the road. I mean, he is a powerhouse, baby, when it comes to economics.
And he got up there with Congress. And, as you said, he was very optimistic. He said: "I think, for the year, the GDP is probably going to finish between 3.5, 3.75 percent. That's not too bad. And some buying is going to happen on the corporate level sooner or later." So, he was sort of like the horse whisperer: talking down the scared, scared markets and calming it down -- not completely calm yet, but you look at that Dow number, it is down. But the Nasdaq number, it is looking a little perky lately.
So, it has been pounded down a lot. But this is actually good news for the markets, OK?
PHILLIPS: And the economy, basically, it is healthy. And I talked a little bit yesterday with one of our analysts about inventory numbers, too. The inventory levels are increasing. And that's a sign the economy is bouncing back, right?
WASTLER: That's right. And, actually, this morning, we had some industrial production numbers. And they were perking up a little bit, too.
However, remember, we still got that hangover. Remember I talked last week about that hangover and just, oh, God, we spent so much in the previous couple years? That is still in the pipeline a little bit. So, even though these numbers are poking up a little bit, it doesn't mean the vital things that we need to happen in corporate America for it to translate to a big bounce in the market. That's two things. Corporations have to hire some more people.
PHILLIPS: Pay them more. They have to pay them more.
WASTLER: Pay them more and hire them. And they need to buy new equipment, OK, capital spending. Whenever you hear the economist talking heads come on: "Well, we need to see an upsurge in capital spending." They are talking about buying more machines to make widgets, OK? Right now, the upsurge you are seeing, they are hiring temporary workers or asking their current workers to work longer hours, like me, or...
(LAUGHTER)
PHILLIPS: We can all relate.
WASTLER: Or they are doing it with rental equipment and things like that. So, yes, the numbers are looking a little bit better, but it is not enough yet to really overcome the psychological angst that the markets are in. Congress actually holds the key to that.
PHILLIPS: Let's talk a little bit about that. They are meeting behind closed doors. There is a lot in their hands right now -- its hands.
WASTLER: That's right.
They've got to go behind closed doors and figure out what they are going to do about the accounting industry. And Alan Greenspan today, he spoke about that, too. Actually, if you are used to Fed speak, where he is usually sort of "bubuda, bubuda, bubuda" about stuff, he was actually pretty clear-cut about this. He said you need to penalize the CEOs and straighten them out where they are doing wrong.
Now, Congress has already made steps that way. But now the Senate has got its bill, which is kind of tough. And the House has got its bill, which is not as tough. They got to get together, come out with a compromise, and get it done fairly quickly. Now, you just saw that White House press conference. The White House spokesman, he was saying, "Hey, the president wants you guys to hurry up get this done before you go home for August." If Congress can do that and come out with a solid bill, it will probably go a long way to encouraging the markets a little bit more that something is being done. Then, hopefully, things will start on a little buying binge, get it up there. And you and I can read our 401(k) statements and stop panicking so much.
PHILLIPS: Start thinking about our vacations and our retirement. That's right. It is our responsibility, too. We have got to stop being so scared and we've got to step up to the plate.
WASTLER: There you go, you know?
PHILLIPS: All right.
WASTLER: Life goes on.
PHILLIPS: Hey, there you go. Easier said than done.
(LAUGHTER)
PHILLIPS: Allen Wastler -- thanks, Allen. It's always a pleasure.
WASTLER: Take care, Kyra.
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