NEW YORK -- It's early morning in lower Manhattan. More than 50 floors above New York Harbor, in a large room with a sweeping view of the Statue of Liberty and the sun-touched roofs of Ellis Island, 40 people sit quietly chatting, waiting for their day to begin.
At one desk in the middle of the room, a well-dressed man in a white-collared shirt and suspenders pops a stick of gum into his mouth. Next to him and above him, video screens display rows of numbers and charts. On a wall with clocks showing the time in London and Tokyo as well as New York, the minute hand moves toward 8:30.
Suddenly, over the quiet hum, comes a voice: "One minute."
The chatter ceases. Everyone takes their positions. And as the clock moves just past the half-hour, a man's voice calls out: "One hundred and six thousand."
The number represents government economists' best calculation of how many jobs were created in the United States in January. Carefully guarded until the moment of its release each month in Washington, the number races across telephone wires and video screens to become, in an instant, a new factor in determining the prices at which New York bond trading houses like this one will buy and sell their products.
As further details are read, phone calls begin to be made and answered. Over loudspeakers come the voices of top company officials in the United States and overseas, linked via a conference call.
From one side of the room a salesman asks a trader for a bid on one-year treasury bills for a customer. "I'll pay 31," says the trader. "Done," says the salesman.
And $100 million worth of securities have changed hands.
As the scene on the trading floor illustrates, the link between Washington and New York has never been closer than it is today.
While Washington provides the words and music, it's the financial markets that write the reviews. And if Wall Street traders decide the tune isn't danceable -- too few jobs being created, in the case of employment numbers, or too much potential for inflation in a federal budget announcement -- their reaction is likely to be swift.
Interest rates will rise or fall on the bond market, and with them the cost of a home mortgage; the dollar will become cheaper or more expensive in the currency market and the stock market will soar or sputter.
Thus, when President Clinton delivers his economic proposals in Washington on Wednesday evening, he will have one eye on Congress and the electorate and one eye on the trading screens -- not just in New York, but also in Tokyo, where daytime trading will be in full swing, and in major trading centers in between.
"The way most guys in currency trading make money is volatility," says Andrew V. Fellingham, the fast-talking head of Bank Austria's trading operations in New York. "If a number comes out and it's different from what we expect, we trade on that, and if it's exactly what we expected, we read something into that. If Clinton says something, it's in the market maybe 30 seconds later."
Mr. Fellingham says that when Mr. Clinton unveils his economic plan Wednesday, he will be watching on television, with a telephone at hand. "It's like being a cop -- you're always on duty." If he should hear something he feels a need to act on, he'll call a trader in Hong Kong who will execute a trade on his behalf. "It's really a small community," Fellingham says, estimating the total of currency traders worldwide at no more than 4,000.
For Mr. Clinton, the announcement of how much stimulus he wants to provide the economy is fraught with peril. If he doesn't come through on his rhetoric about creating jobs, he could alienate much of the public. But if he displeases the financial markets, he risks a jump in the cost of servicing the $4 trillion national debt, which already consumes 14 cents of every government dollar spent.
Just how sensitive those markets are to his remarks was illustrated on Inauguration Day. The bond market fell after Mr. Clinton's inaugural speech, expressing its disappointment that he hadn't given specifics on the deficit or spending cuts.
The people behind that bond market reaction may not be exactly a cross-section of America -- for one thing, most have probably never been unemployed -- but their perceptions are the ones most likely to count.
"It's an unequal game at this point," says Maureen Allyn, chief economist for Scudder, Stevens & Clark, a Wall Street investment company. "The financial markets have all the power."
As those in the trading firms see it, they have already demonstrated their willingness to judge Mr. Clinton fairly. "The dTC markets have probably given President Clinton more of a honeymoon than he's received anywhere else," says Robert Denham, the deliberate, quiet-spoken chairman of Salomon Bros.' parent firm. Sitting in his office in the World Trade Center, a short walk from the hubbub of the firm's bond trading floor, he adds, "You can see that in the fact that long-bond prices are up and the stock market is strong."