Well, I'm sure glad that's over. What I'm referring to, of course, is Fed Chairman Greenspan's two-day, semi-annual, Humphrey-Hawkins testimony before the House and Senate Banking Committees.

Greenspan's testimony didn't really hold any surprises. He forecast that GDP would rise between 2 and 2.25 percent in 1996, that inflation would remain below 3 percent, and that unemployment would fall slightly below the present rate of 5.8 percent.

A couple of his pronouncements during yesterday's House session were:

"Federal Reserve policymakers expect the most likely outcome for 1996, as a whole, is further moderate growth."

"... a number of fundamentals point to an economy that is basically on track for sustained growth, so any weakness is likely to be temporary."

These statements appeared to be interpreted by bond market traders as an indication that an economic boom was just around the corner and that the Fed would make no further reductions in short term interest rates. The yield on the 30-year T-bond jumped from 6.24 percent to 6.40 percent. And, short-sighted stock traders who, lemming-like, react to every twitch in the T-bond, drove the DJIA down 44.79 points.

Conversely, a couple other Greenspan quotes might well have been interpreted to indicate further Fed easing:

"The numbers we've seen so far for the month of January obviously were dismal."

"The Federal Reserve would certainly welcome faster growth -- provided that it is sustainable."

But, yesterday, traders seemed to be predisposed to the sell side.

Today, Chairman Greenspan testified before the Senate. While I don't have any quotes from today's session, I think it is safe to assume that he didn't say anything much different than he said yesterday. So, what do you think the markets did today? Shortly after the stock market closed, the T-bond yield stood at 6.38 percent, a minor recovery. But, the DJIA recouped all of yesterday's loss, and then some, gaining 57.44 points.

What's going on? Well, there's talk going around that the sell off in bonds has been largely due to operations by hedge funds. If this is the case then the recent action in the bond market might well have been prompted by considerations other than the fundamental status of the economy. I can believe that, because I have not seen any evidence of any fundamental shift in the economy over the past few weeks. And, I bet if you asked Alan Greenspan he would say the same thing. It seems that today the actions of knee-jerk stock market traders who react to every short-term bond market blip were overcome by the buying of investors who recognized the recent 143 point sell off in the Dow as a buying opportunity.

Meanwhile, in the heartland of America, the Kansas City Federal Reserve Bank released the results of its quarterly survey of manufacturers in the Tenth District. The survey is conducted during the first month of each quarter.

The January report revealed that business conditions had weakened modestly from the level recorded in the October survey. Prices received for finished goods were about the same, but inventories of those goods increased somewhat. Indexes of employment, new orders, shipments, backlogs, and delivery times all declined, and prices for raw materials slowed since the last survey. Nevertheless, the survey respondents were generally optimistic about prospects for the next six months, and the KC Fed's senior economist felt that, in light of recent results reported by factories nationwide, the manufacturers in the KC district were doing comparatively well.

The Tenth District includes Kansas, Oklahoma, Colorado, Nebraska, Wyoming, western Missouri, and northern New Mexico.

On the retail front, Mitsubishi Bank/Schroder Wertheim reported that same-store sales during the week ended February 17 rose 2.7 percent from the week before. For the month to date same-store sales rose 1.9 percent compared with the same period in January. Mitsubishi forecasts that same-store sales for February will beat sales for February 1995 by 2.1 percent. Could it be that the retail sector is reviving? I think I'll defer judgment on that until I see the Commerce Department's more-comprehensive monthly retail sales report next week.

Byline: Lafferty (MF Merlin)