Greenspan Not About to Shuffle Off the Monetary Coil

Over the past few years, traders caught on the wrong side of the bond futures have found recourse in one of the following three rumors: Treasury Secretary Robert Rubin is going to resign; Russian President Boris Yeltsin died; Federal Reserve Chairman Alan Greenspan has just had a heart attack.

The Rubin rumor doesn't work anymore, and the Boris rumor, which sends money scuttling into Treasuries, is strictly the province of longs. For anyone caught short in a market going long, the only thing left is a variation on the Greenspan theme. That was the one that got sprung today. And old though this chestnut may be, it still packs a wallop.

The bond and stock markets both took a turn lower midway through the morning in New York as rumors that Greenspan is planning his resignation hit the market by way of Chicago and London. There was chatter that the Fed head was leaving because he doesn't like working with the new Treasury secretary, Lawrence Summers. There was talk that a hedge fund adviser -- either Medley Global Advisors or Johnson Smick International -- had said the chairman was on his way out. There was even, apparently, some chatter about the G-Man having gotten himself embroiled in a sex scandal (like that's enough to get someone kicked out of Washington). ...