Irrational depression, part 2
It was another wild ride on the stock roller coaster this week. Stock market investors are increasingly sensitive to rumors, earnings reports, economic data, and of course remarks by Federal Reserve officials. The sensitivity to predictions was particularly noteworthy this week. Wayne Angell was wrong. It was a black mood all week.

Not many Wall Street analysts can move the markets - particularly in normal times. Goldman Sachs' Abby Joseph Cohen typically moves markets on her stock prognostications. Former Fed governors are considered a special breed. Since they have worked at the Fed, they carry the knowledge of how the process of policymaking actually works. But this "inside" knowledge is very time sensitive. Their best forecasts occur within six months of their Fed career. Anecdotal evidence shows that former Fed governors do no better at predicting Fed policy than the average Wall Street economist.

After all was said and done, only the Dow Jones Industrials were up marginally from a week ago. The Nasdaq composite index fell the most - down 6.3 percent. The S&P 500 and the Wilshire 5000 are down slightly from a week ago while the Russell 2000 is virtually unchanged. Market analysts are still unsure whether these have hit bottom. Some are talking about the great opportunity of buying the Nasdaq now, while others would rather wait to see major names like Cisco, Sun, and Oracle turn around.

Treasury prices head up (and yields down)
The Treasury securities market had a much better week than the stock market. For the most part, bond prices rose nearly every day (and bond yields declined) until Greenspan's budget remarks on Friday morning. It isn't unusual to see Treasury securities benefit from turmoil and down drift in the stock market. Greenspan's testimony was similar to what he said about a month ago before the Senate Budget Committee. He agreed that tax cuts are better than spending gains to offset surpluses. He also indicated that the elimination of the U.S. debt was a strong likelihood over the next six years. He suggested that the Treasury securities market was a good benchmark, but not altogether a necessary one.