KAUFMAN SAYS GREENSPAN NOMINATION BAD FOR BONDS
Henry Kaufman, managing director of
Salomon Brothers Inc, said the nomination of economist Alan
Greenspan to replace Federal Reserve Board Chairman Paul
Volcker is bearish in the near term for the fixed income and
currency markets.
    "The basic direction of interest rates is not changed. The
fundamental direction of interest rates continues to be upward,
interrupted by intermittent rallies," Kaufman said in a
statement. He said the implication for equity markets in
neutral to bullish.
    Kaufman said, "Unlike Paul Volcker, who entered the office
of the Federal Reserve chairman with strong credibility both
domestically and internationally, Mr Greenspan will have to
demonstrate both his competence and policy independence before
he can gain full confidence of the financial markets."
    Greenspan is most knowledgeable on the behavior of the U.S.
economy, while his professional skills in the international
area are much more limited, Kaufman noted.
    "Consequently, although he is well known abroad, his views
on issues such as the Less Developed Country Debt may initially
carry less weight than have those of Mr Volcker."
 Reuter
