Courtesy of a poster to csy2k:
------------------------------
For those of you still believing the LA Times see this from
Dr. Ed himself.
bernie///
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Subject: Re: Yardeni is still at 70%
Date: Sun, 14 Mar 1999 20:47:03 -0500
From: Ed Yardeni <yardeni@yardeni.com>
To: Bernie Sayers <Sayers@y2koncepts.com>
Subject: What's New On Dr. Ed's Econet
Cc:
COMMENT: My favorite stock market model shows that stocks
are currently 29%
overvalued. And that's using consensus earnings forecasts
showing gains of
15% in 1999 and again in 2000. These are unrealistically
high, in my
opinion. The market is priced for perfection and perpetual
prosperity. When
the crowd believes that nothing can go wrong that's when
things usually go
wrong. This is not to say that good things aren't happening.
Asia has hit
bottom, for now. Japan is slowly restructuring, and the
Nikkei is
responding positively. OPEC's promised output cuts are
lifting stock prices
in the energy sector. US growth is booming, while inflation
remains near
zero. Look for the market to move to 11,000 in an early
summer rally. Then,
during the late summer and fall, look for possible trouble
in disappointing
earnings, increasing and spreading Y2K concerns, perhaps
another Chinese
devaluation, more bad economic news from Japan, a growth
recession in
Europe, a recession in most of Latin America, and another
round of
deflation in the commodity pits. A bear market could unfold
if enough goes
wrong later this year. I'm not rooting for this
scenario...just covering
your back while you are getting rich in the stock market.
Y2K: I was recently mentioned in an LA Times story on Y2K as
follows:
"Edward Yardeni, chief economist for the investment banking
firm Deutsche
Bank Securities Inc. and one of the most persistent
drumbeaters on the Y2K
issue, recently revised his estimate for a long global
recession due to the
glitch, from a 70% chance to 45%. "I've toned down the
message partly
because progress has been made," Yardeni said. "I would be
happy to back
off entirely." I still see a 70% chance of a global
recession. Previously,
I've written that it could be as bad as the 1973/74
downturn. In my Feb.
22, 1999 Y2K REPORTER, I listed five possible Y2K outlooks,
which include
three recession scenarios and probabilities: 25% for a mild
recession, 40%
for a bad one, and 5% for a depression. The
probability-weighted average is
a 3% drop in real GDP lasting about 12 months--a bad
recession. Of course,
I would be more than happy to turn less pessimistic--and I
will do so--if I
believe the available data warrants such a change. My aim
last year was to
raise awareness and alarm to stimulate greater efforts to
fix the problem.
This year my goal is to promote contingency planning to
minimize Y2K
disruptions. I tend to agree with my friend Peter de Jager,
who believes
that doomsday will be avoided, and Peter deserves a great
deal of credit
for his efforts. Nevertheless, I doubt a serious recession
will be avoided.
SUBSCRIBERS: In my latest GLOBAL ECONOMIC ANALYSIS, I review
my stock
market outlook for the near-term and my "15,000 by 2005"
forecast. I also
explain why it is time to bury the mythical tradeoff between
unemployment
and inflation. Growth is good if it is based on productivity
and
disciplined by competition. Low inflation leads to low
unemployment.
PUBLIC: You can now find SLIDE SHOWS of charts showing US
exports by
products and by regions. The latest ECONOMIC SCOREBOARD
shows the US is
still booming. A selection of ECOFAXES is open to the
public. The video
clip of my Wall Street Week appearance earlier this year is
posted in the
Media Center on my home page.
Dr. Ed
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