Fortune Investor Data
Alan Greenspan is hard enough to understand after he speaks; no wonder that on a Monday sandwiched between an inflation scare and a Fed meeting, the markets were a little queasy. The Dow began slipping steadily at the opening bell, before coming back to a 60-point loss by the close, a middling sell-off predicated on something like general unease. "It's really just uncertainty," says TIME senior economics correspondent Bernard Baumohl. "People are thinking about inflation again, and bond yields are very high -– which makes them suddenly look like a reasonable alternative to stocks if the Fed does put the brakes on the economy."
Few expect Greenspan to do anything drastic like actually raise rates; the current guessing game is about which way he'll lean in his inaction. A so-called tightening bias would mean Father Fed has his finger on the rate-hike trigger -– which of course, to the markets' pricked-up ears, will be a strong signal that the Fed is taking inflation seriously again. That itself may be enough to push up rates on the Street, and indeed, such a virtual rate hike may be just what Greenspan has in mind to cool off the economy without taking a policy plunge. Welcome to the Goldilocks economy, where everything, at present, is just right. And where the slightest rustling in the forest can get everybody thinking bear.