Analysts scoff at scandal's effect on market, but ...
By Larry Barrett, ZD Inter@ctive Investor
January 23, 1998 2:50pm
Inter@ctive Week Online
zdii.com
Ask financial analysts if the Clinton sex scandal thing affects the market and the reaction you'll get is unbridled laughter. But they'll also eventually acknowledge it could cast storm clouds over a relatively bright economic climate.
"I don't put any credence behind the notion that whatever the President's situation is or will become is hampering the market," said Phil Rueppel, an analyst at Hambrecht & Quist. "The fundamentals of the companies traded aren't affected by it. There are other real concerns that are keeping technology stocks in check."
Granted, the ongoing economic situation in Asia presents a much greater obstacle to earnings growth than any special prosecutor. But the Dow has faltered since the news of President Clinton's alleged affair with a former White House intern became a media feeding frenzy.
"There's always going to be that correlation made by the media," said Jeffrey Baker, an analyst at Principal Financial Securities. "But it's a real stretch. Right now, we're in the middle of earnings season, have all kinds of problems in Asia and are seeing lower average sales prices for most of the technology sector. Investors have better things to concern themselves with than whether the President is sleeping around."
True enough, but Republican legislators are suggesting impeachment if the allegations of onstruction of justice are confirmed. As the media tightens its grip on the story and investigations begin, the mere possibility of Vice President Gore assuming control of the global economy's nerve center could rattle investors.
"Hypothetically, if there was an impeachment I think there would be a cooling effect on Wall Street," said Stuart Johnson, an analyst at Schroder Wertheim & Co. "Anytime you change horses in midstream, you'll have anxiety on all fronts, including the stock market."
Most analysts preferred to comment off the record. Not that they didn't have an opinion, but because most of them haven't perfected the art of mind reading.
"The market will tread water for awhile now as we sort out what's going on in Korea and Japan," Rueppel said. "But it has nothing to do with the President." |
