S&P Slips Into Greenspan Gulch

The former Fed chief is often wrong, but the rally halts on his comments. Plus, 'Should You Buy It?' and the latest on Amazon.com.
Author:
Publish date:

"Alan Greenspan is not Nostradamus. Or maybe he is because Nostradamus was often wrong, too," Aaron Task, Editor-at-Large of

TheStreet.com

, says on Wednesday's

"The Real Story" podcast. "Greenspan is human, which means he's fallible."

In addition to his famous "irrational exuberance" comment in 1996, the former

Fed

chairman was wrong about adjustable-rate mortgages in 2004 and natural gas prices in 2003, Task says. More recently, he has been forecasting rising probability of a recession in the U.S., even as economic growth appears to be rebounding.

Despite that unenviable track record, comments by Greenspan that China's stock market is "clearly unsustainable" were widely attributed as causing an afternoon selloff in U.S. stocks Wednesday. Major averages were higher earlier in the day amid another round of M&A activity, including:

  • Alcan (AL) - Get Report urging shareholders to reject the $27 billion hostile offer from Alcoa (AA) - Get Report and rumors it may be in talks with BHP Billiton (BHP) - Get Report;
  • Crescent Real Estate Equities (CEI) - Get Report reaching an agreement to be bought by a unit of Morgan Stanley (MS) - Get Report in a $6.5 billion arrangement, including debt;
  • Payless ShoeSource (PSS) acquiring Stride Rite (SRR) for roughly $800 million, or $20.50 a share.

The M&A activity is definitely a positive, and Task notes other issues also may have contributed to the afternoon slide -- including technical-related selling as the

S&P 500

touches its March 2007 high, rising Treasury yields and heightened geopolitical tensions in the Middle East.

Task's first guest Wednesday was David Peltier, with the weekly "Should You Buy It?" segment, which featured insights on

ConocoPhillips

(COP) - Get Report

,

Adobe Systems

(ADBE) - Get Report

, and

Goldman Sachs

(GS) - Get Report

vs.

Morgan Stanley

(MS) - Get Report

.

Task's second guest,

TheStreet.com

Senior Writer Vishesh Kumar came on to discuss the ongoing surge in shares of

Amazon.com

(AMZN) - Get Report

, as well as the latest developments in the

Microsoft

(MSFT) - Get Report

-

Yahoo!

(YHOO)

mating game.

In the remainder of the podcast, Task reviewed the day's corporate news, including results from retailers

Target

(TGT) - Get Report

,

Dillard's

(DDS) - Get Report

and

GameStop

(GME) - Get Report

; huge moves in biotech firms

Cypress Bioscience

(CYPB)

and

Vion Pharmaceuticals

(VION)

; and

Analog Devices

(ADI) - Get Report

falling into "The Geoff Tate Zone."

Click

here to listen to the entire podcast.