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Waiting for Godot


Alors? On y va?

Like Vladimir and Estragon, two characters from Samuel Beckett's play, "Waiting for Godot," we're waiting... for Greenspan. Because nothing is happening here unless he says it's happening here; inflation, deflation, stagflation, whatever. It's the chairman's call. We're just waiting for the verdict to be delivered in his testimony to the Joint Economic Committee beginning at 10 a.m. today.

To be sure, there's much to sort out. Between the verbal contortions of Fed heads Fisher, Bies and Guynn over the past week, we're pinned down somewhere between the eighth inning and the fourth period of double secret overtime in who knows what kind of game.

On the table today are the following:

The Conundrum - Why are long-term yields stubbornly refusing to move higher? Since the Fed began raising rates, the 10-year Treasury Note has fallen from just above 4.5% to just below 4%. Why? What does it mean? Will the yield curve invert? Does that forecast a looming recession? The answers to these questions today will swing back and forth between "yes, no, and possibly."

The Economy - Fed officials have been out in full force over the past week talking about an economy that's "pretty darned good" and, if not firing on all cylinders, at least motoring along at an acceptable pace. Of course, fitting the economy into the puzzle proffered by the conundrum is a bit like trying to pull a tube sock over a television - a conundrum's conundrum.

Real Estate - With this week's Time magazine cover announcing the joys of housing, expect Chairman Greenspan to poke at least a few holes in the get-bankrupt-quick scheme known as "house flipping," as well as the bi-coastal frenzy for all things realty-related. Words and phrases such as "froth," or "speculative intensity" will commingle with marginally positive talk about secular trends in home prices, demographics, savings and rising asset prices.

In other words, while we're anxiously waiting for Godot, just as in Beckett's play, the storyline is built around a man who will never show up. Those viewing the testimony through a bearish lens will find plenty of fodder for the wires, while those viewing the testimony through rosier shades will find evidence to bolster their side of the market coin. So we wait. Eh bien, continuons.
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