“Although blue-chip stocks are hitting all-time high after all-time high, former Fed Chairman Alan Greenspan told CNBC Friday that “irrational exuberance” is the last term he’d use to describe today’s market.
Greenspan said in a “Squawk Box” interview that stocks by historical standards are “significantly undervalued” even considering the recent moves higher. He added that the payroll tax increase didn’t dent spending because of rising asset prices.
Greenspan coined the phrase “irrational exuberance” in 1996, when he was asked a question about soaring stocks at that time. The year 1996 was coincidentally the last time the Dow Jones Industrial Average had its last 10-session winning streak.
Blue-chips will try to make it 11 in a row on Friday. That would be the first such run since late 1991 into 1992. And whether this makes it more or less likely, the Dow has closed higher every Friday so far this year.
Meanwhile, the broader market measure S&P 500 Index is just a couple points away from its all-time closing.
On banks and the concept of “too big to fail,” he argued that it’s the most important regulatory issue of our time, saying the problem is “getting worse, not better.” But he added that the Dodd-Frank Wall Street Reform Law was based on a faulty structure and he doesn’t think it will be fully implemented….”
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