Greenspan says whether there is a recession or not could depend on the stock market

Market sentiment was lifted after Hong Kong leader Carrie Lam said she will withdraw an extradition bill that sparked mass protests.

Former Federal Reserve Chairman Alan Greenspan said the stock market will determine whether the U.S. is headed for a recession.Squawk on the Street

on Wednesday. "We underestimate the wealth effect on the economy and this type of volatile stock market moves, it has an impact which I don't think we fully understand nor measure correctly." Wealth effect suggests people spend more when the value of their assets rise. "I think it's important to recognize that if we get a major stock market adjustment, we are going to feel it in the economy which has very short leg," Greenspan said.

Greenspan, 93, said the U.S.-China trade war is a "major global issue" and it's "eroding" the global economy. The tit-for-tat tariff threats roiled the stock market in August with the

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