Greenspan 2000 (but Kospi right now)
June 23, 2026
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–Near SOFR contracts made new lows for the move, with the lowest contract being SFRH7 at at price of 9581, down 4.5 on the day to a yield of 4.19. Red contracts were hit hardest, with Z7, H8 and M8 down 8.5 to prices of 9596, 9602.5 and 9606. Even though oil was lower on the day, rate hike fears are dominant. Of course, there are also auctions this week of 2, 5 and 7 yr notes.
–2y note ended +5.5 bps to 4.23% and 10s were up 6 bps to 4.509%.
–Just a quick word about stocks/semis: Example is Sandisk, SNDK which closed nearly 2274, up 89 on the day. Friday expiration 2500 calls are over 70!! I guess there’s some mathematical sense to it: On June 5, the stock was 1559. Now, ten sessions later it’s up 715 points. So that’s an average of 71 points per day. Four days until expiration is 284 added onto current price which delivers a mark of 2558. So right around breakeven for the call.
[I wrote that yesterday. Today, the picture has, ahem, changed. Kospi down 10%. Semis looking like a classic island top. The press is delighting in the pullback of SpaceX]
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In commemorating Alan Greenspan, I was looking for a specific quote that I was unable to track it down – basically a snippet where he said long term interest rates thru the arc of time have been around 3 to 6%. One of his most famous lines referred to “irrational exuberance” (from 1996). However, almost all of Greenspan’s speeches are extremely informative. I am just including a few excerpts of this one, from March 2000, which obviously couldn’t be known at the time, but was the very top of dotcom. Worth reading all, but I have highlighted salient sentences. Note that ‘irrational exuberance’ was in 1996, but at the absolute highs.in 2000 there’s NO WARNING AT ALL. Even G’span had capitulated.
These excerpts could easily transfer to today. History rhymes.
Remarks by Chairman Alan Greenspan
Economic challenges in the new century [Economic challenges related to AI]
Before the Annual Conference of the National Community Reinvestment Coalition, Washington, D.C.
March 22, 2000
https://www.federalreserve.gov/boarddocs/speeches/2000/20000322.htm
And because technological change has spawned so many opportunities for businesses to expand the range and value of their goods and services, the introduction of new efficiencies has not led to higher unemployment. Rather, the recent period of technological innovation has created a vibrant economy in which opportunities for jobs and new businesses have expanded, enhancing the living standards of a large majority of Americans.
How did we arrive at such a fascinating and, to some, unsettling point in history? While the process of innovation, of course, is never-ending, the development of the transistor after World War II appears in retrospect to have initiated a special wave of innovative synergies. It brought us the microprocessor, the computer, satellites, and the joining of laser and fiber-optic technologies. By the 1990s, these and a number of lesser but critical innovations had, in turn, fostered an enormous new capacity to capture, analyze, and disseminate information. It is the growing use of information technology throughout the economy that makes the current period unique.
Much attention is focused on the role of corporate giants in fostering innovation, but we would be foolish to understate the extent to which America’s innovative energy draws, and will continue to draw, from the interaction of both large and small businesses. Nowhere in the world are the synergies of small and large businesses operating side by side in a dynamic and competitive market economy more apparent than in this country. Of course, the surging growth of young high-tech firms and the flashy presence of new Internet businesses capture the most public attention.
The most common complaints include the difficulty of finding qualified workers in the midst of strong competing demands for labor.
Overall, our evolving economic and financial systems have been highly successful in promoting growth and higher standards of living for the majority of our citizens. But we need to reach further to engage those who have not been able to participate. One way is through the education and training of our workforce–that is, enhancing our stock of “human capital,” which is a necessary complement to our ever-changing physical capital. A major consequence of the fast-paced technological change of recent years and the growth of the conceptual emphasis of our nation’s output has been to increase the demand for skilled workers.
Another consequence of rapid economic and technological change that needs to be addressed is a higher level of worker insecurity,which is the result, I suspect, of fears of potential job skill obsolescence.
As one might expect, greater worker insecurities are also creating political pressures to reduce the fierce global competition that has emerged in the wake of our 1990s technology boom.
Of course, we need also to consider trends in wealth, which, more fundamentally than earnings or income, represent a measure of the ability of households to consume. The Federal Reserve’s Survey of Consumer Finances indicates that the median real net worth of families increased 17-1/2 percent between 1995 and 1998. As one might expect, the rising stock market coupled with the spreading ownership of equities was an important factor. However, even in the face of the strong aggregate trend, median net worth declined over this period for families with incomes below $25,000, and medians for non-whites and Hispanics were little changed.
We are experiencing an extraordinary period of economic innovation. At the policy level, we must work to configure monetary policies that will foster a continuation of solid growth and low inflation. Beyond this primary mandate, we at the Federal Reserve are also responding to the challenge of ensuring that all communities can fully participate in our growing prosperity.
