The Week Ahead
Back in the day, equity market investors used to bank on the idea that there was a Greenspan put. The long-serving Fed Chair viewed stocks as both a signpost of economic fortunes and a factor guiding them. He was also a heavy metal fan. Not the music, but the price series for industrial metals, as an indicator of the ebb and ow of global growth.
The result was that both equity and commodity investors would speak about the “Greenspan put”, the idea that if markets tumbled enough, a Fed rate cut would ride to their rescue. Greenspan did indeed cut rates after the October 1987 stock market crash, and in the turmoil following Russia’s default in the late 1990s.