Wall Street can be obtuse when it wants to be, and right now, as the markets gyrate, many brokers are pretending to themselves and to their customers that they are confused by Federal Reserve Board chairman Alan Greenspan.
Greenspan is being perfectly clear. The problem for Wall Street is that he is not saying what the financial community would like to hear. In hours of testimony before the Senate Banking Committee last week, and again Tuesday at the House Banking Committee, Greenspan served up one message:
Barring some unforeseen catastrophe, there will be no major changes in monetary policy leading to lower interest rates until there is a White House-congressional agreement to cut the budget deficit at least $50 billion for the fiscal year beginning in October. Then, he predicts, market interest rates will come down, and the Fed will facilitate the process.
In that case, ''you can assume the Fed will act to keep the economic expansion on track,'' Greenspan said. Lower interest rates could be in effect immediately, ''even on the same morning.''
To White House officials who in effect have been saying to him, ''Please lower interest rates right now, because we have a budget summit pledged to do something about the deficit,'' Greenspan has responded: You guys go first -- I've been fooled by your budget summits before!
Of course, what Wall Street had been hoping to hear, as it parsed every word in Greenspan's long appearances on the Hill, was a flat pledge to lower interest rates to combat what financial-market experts -- and many others -- believe is an incipient recession.
When the Dow-Jones industrials dropped almost 109 points Monday morning before recovering, Wall Street sensed a bit of panic in the air. And traders were quick to blame Greenspan for his stubbornness on interest rates.
But there are more basic trends: budget deficit projections for both fiscal 1990 and 1991 are soaring out of sight -- not counting the huge costs of the S&L bailout. Yet, there is little discernible progress in the budget summit talks.
Moreover, the economy is being dragged down by shaky real estate markets -- a spillover, in part, of the S&L crisis, which has depressed values and forced banks to tighten lending standards. Disappointing earnings reports emphasize the underlying weakness.
Yet, Greenspan's evaluation of all of these negative signs is that while ''things are not as good as they could be'' and that recent conditions ''increase the probability of recession a shade,'' the economy nonetheless will not dip into a recession. On the contrary, he predicts real growth this year of 1.5 percent to 2 percent (that's slow, but not a true recession), with better results in 1991.
Wall Street has a gloomier appraisal, one that could be more on target than Greenspan's. In the past -- notably, in 1975, when he was chief economic adviser to president Ford -- Greenspan showed a willingness to stay with a conservative policy too long because of his strong instincts to give fighting inflation the top priority.
Adding it up, Greenspan is saying the United States will muddle through without lowering interest rates -- the step that has been publicly urged on him by Treasury Secretary Nicholas F. Brady as well as by Wall Street. Naturally, as the country heads into congressional elections this year and a presidential election in 1992, the Bush administration would like to ensure a strong economy with low unemployment rates.
Greenspan, a Republican, is nonetheless apolitical in this situation. Bush may or may not reappoint him as chairman in 1991: he doesn't respond to jawboning by the White House or Treasury. His one concession to current conditions was a step two weeks ago to offset the effects of tightened credit standards enforced by the banks to correct ''some of the excesses of the 1980s,'' when both banks and S&Ls encouraged overbuilding in the real estate markets. Greenspan hailed the banks' new caution as prudent but felt that lenders had edged over the line and had become ''too restrictive'' with ''unwelcome effects'' on the economy.
But that was a one-time correction, Greenspan insisted, ''not a major policy change'' or the opening shot of a general move toward lower interest rates.
A careful examination of Greenspan's testimonies, then, suggests that the only sure route to lower interest rates (barring a new reading of the economic tea leaves that would show cumulative signs of a recession) is a budget summit result that produces a ''major, credible'' deficit cut toward the end of this year or before.
There are many experts who conclude that Greenspan would do better to act now. That assumes that he could carry his board of governors for such action, which is doubtful: inflation remains a concern, as always, at the Fed.
With the budget-deficit estimate soaring every day, the consensus view at the marble palace on Constitution Avenue is that lowering interest rates before a budget deficit is signed, sealed and delivered (without mirrors) would be the height of folly.