Ex-Federal Chairman On The Economy: Prepare For The Worst And “Run For Cover”

Screengrab / CNN Business / Youtube

Alan Greenspan said the markets could still rise, but warned the ensuing correction would be painful.

Former Federal Reserve Chairman Alan Greenspan warned investors last week that the next market correction will be painful, saying during a CNN interview: "At the end of that run, run for cover."

Via CNN Business:

The former Federal Reserve chairman who famously warned more than two decades ago about "irrational exuberance" in the stock market doesn't see equity prices going any higher than they are now.

"It would be very surprising to see it sort of stabilize here, and then take off," Greenspan said in an interview with CNN anchor Julia Chatterley.

He added that markets could still go up further — but warned investors that the correction would be painful: "At the end of that run, run for cover."

Recent volatility in the markets has been largely pinned on President Donald Trump’s ongoing trade battle with China and worry that a global economic slowdown is coming down the pike.

Adding to the mix has been interest rate hikes by the Federal Reserve — moves the president has been quick to blast.

President Donald Trump has in recent weeks taken repeated aim at current Fed chairman Jerome Powell, a former investment banker appointed last year by Trump himself. The President, a close market-watcher who has staked his presidency on the state of the economy, has accused Powell of trying to undercut him politically by slowing the economy down.

Despite pressure from the White House, Greenspan doesn’t believe Powell will change policy if the Fed believes raising rates is the best course of action:

"I've seen no evidence of that," said Greenspan, who said during his tenure he figuratively wore "ear muffs myself." Adding he never recalled a time when someone had wished he had raised rates.

"We listen — sometimes respectfully, sometimes not," he said. "But do we change policy? 'No.'"

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