Twenty years ago today, Alan Greenspan warned of a market bubble and said asset prices were reaching unsustainable levels.
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In his famous "Irrational Exuberance” speech, the former Federal Reserve chairman said, “but how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”
The speech was heard across both Main Street and Wall Street, making its mark in the global financial markets. But was Mr. Greenspan ahead of the curve in warning of another bubble?
“I think you can argue both ways because he was certainly early in predicting the dotcom bubble. But, think about what happen after the bubble. When you think of the economy today, the five largest market capitalization stocks in the U.S. are on Nasdaq and they are internet-based companies,” Nasdaq CEO Robert Greifeld said during an interview on FOX Business Network Cavuto: Coast-to-Coast.
Greifeld said it’s unnatural for an economy to operate in a near zero interest rate environment for this long. He expects to see higher economic growth under a Trump presidency.
“With the election of Donald Trump as president, I think you are going to see greater economic growth. You are going to see more inflationary pressures and as a result, you’ll see bond prices move will move and yields will go higher,” he said.
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As the market continues to rally in the month since Trump’s election victory, Greifeld discussed why he believes Trump’s proposed policies will be good for business.
“Certainly, the theory was if President Trump was elected that the markets will go down that was the initial reaction. But it didn’t take the market long to recognized that he will be a pro-business president,” Greifeld told host Neil Cavuto.
As the outgoing CEO of Nasdaq, Inc. (NDAQ), Greifeld, who will retire on January 1, said he has spent a great deal of time with leading technology companies from around the world and is impressed by the level of innovation still in the pipeline. According to Greifeld, there aren’t enough people to fill the jobs in technology sector and he thinks Trump can boost the economy by helping technology companies address the H-1B visa program.
“When you have a demand for these highly educated people, I think the President-elect has said that if we need them, we’ll bring them in. So if that happens, I think that will be very important,” Greifeld said.