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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (8173)	8/28/1999 11:06:00 AM
From: Ian@SI	Read Replies (1) \| Respond to of 15132

Justa, I guess that means we've still got another 3 years or so of friendship if Morgan can be believed. :-) Ian I hold no grudge against you for your thoughts on market timing so long as CYMI keeps going up <g>.

To: Justa Werkenstiff who wrote (8173)	8/29/1999 5:24:00 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 15132

Abby says Third Rate Increase is in the Market My note: I do not believe Cohen said "probably" in relation to a rate rise in October. I believe she said a rate hike then was a possibility. We should try and find the transcript. Goldman's Cohen Says Third Fed Increase Won't Stall US Stocks Washington, August 29 (Bloomberg) -- Abby Joseph Cohen, one of Wall Street's most optimistic and accurate investment strategists, said the U.S. stock market will continue its strong gains into 2000 -- and one more increase in U.S. interest rates this year won't give much of a jolt to investors. ''What drives stock prices ultimately is how long the economy can grow, and we don't see it ending,'' Cohen said on ''Face the Nation,'' a CBS news show. ''Stock prices will continue to rise in concert with profits.'' Cohen, chief investment strategist at Goldman, Sachs & Co., predicted the Federal Reserve will raise interest rates a third time this year, probably in October. That move is ''already discounted in the marketplace'' she said, calling the Fed's two interest-rate increases this year a ''partial reversal'' of three cuts made last year in response to the lack of liquidity in financial markets that followed Russia's debt default. Investors didn't blink last week when the Fed raised the overnight bank lending rate a quarter of a point for the second time in two months. The Dow Jones Industrial Average set a record high of 11,299 on Monday, even as investors expected the Fed to boost rates the next day. It set another record high on Wednesday, closing at 11,326. And the Nasdaq Composite Index rose 4.2 percent last week. Greenspan's Outlook On Friday, Fed Chairman Alan Greenspan suggested in a speech that the U.S. central bank is paying attention to the potential inflation impacts of rising stock and home prices. Cohen said she interpreted those comments to mean Greenspan was simply noting the effect on the economy of the increased wealth that's been produced by the rising prices of both homes and equities. ''He's saying the equity market is having a mild impact'' on the economy, Cohen said. The effect of increased home values is broader because nearly ''60 percent'' of Americans don't own stocks, she said. ''Mr. Greenspan's comments were actually very interesting,'' Cohen said. ''What he indicated was that normally the economy will drive asset prices, that is, home prices and stock prices, and he is of the opinion that more recently home prices and stock prices are also having an effect on the economy. That is, as those prices go higher, consumers are spending more of the equity they have in there. And so, I think Mr. Greenspan is letting us know that he's watching.'' Cohen rejected a suggestion that Greenspan was suggesting he'd ''keep raising interest rates until this market cools off.'' ''I believe that Mr. Greenspan has been consistent over an extended period of time telling us that he believes that the economy is sound and that investors should be thinking about whether stocks are reasonably valued and he made a point of not making a statement on that issue on Friday.'' Cohen's Outlook Cohen gave no hint she'll hedge her bullish outlook for Wall Street. She currently recommends customers have 70 percent of their money in stocks. Cohen projects 7 percent to 8 percent growth in operating earnings per share for companies in the Standard & Poor's 500 Index. Her current year-end target for the S&P 500 is 1325, and 10,300 for the Dow Jones Industrial Average. The S&P closed Friday at 1348, while the Dow closed at 11090. Although she expects the economy and the stock market to continue its gains, Cohen said the U.S. Congress should ''be very careful'' on the question of tax cuts. The Republican-controlled Congress recently approved a $792 billion tax cut package. President Bill Clinton says he'll veto it, setting the stage for negotiations toward something smaller. The budget surplus that sparked the Republican push for a big tax cut ''might not be as large as we think,'' Cohen said, adding that paying down U.S. debt should be an important priority for the surplus.

To: Justa Werkenstiff who wrote (8173)	8/29/1999 5:33:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

More on Abby Goldman's Cohen on US Stock Market, Interest Rates: Comment Washington, August 29 (Bloomberg) -- Following are comments from Abby Joseph Cohen, chief investment strategist at Goldman, Sachs & Co., on U.S. stocks, interest rates, and the recent suggestion from Federal Reserve Chairman Alan Greenspan that the Fed should pay more attention to the stock market. Cohen -- one of Wall Street's most optimistic and accurate strategists -- made her comments on ''Face the Nation,'' a CBS television news program. ''It's important to recognize that Mr. Greenspan in his public speeches is often complex, but usually not very complicated. And this speech on Friday, like others, was very rich in information. ''Among the things he did say was that the Federal Reserve needed to be looking at other factors that were driving the economy. One thing he talked about, perhaps more than others, was the rise house prices and the way that's encouraging consumers perhaps to be spending more than they otherwise would be doing. And then, of course, there's the wealth effect associated with the rise in stock prices. ''By and large, we think that interest rates, which have already moved up about 50 basis points between June and now, may be rising again a little bit more in October, but let's keep in mind that a year ago, the Federal Reserve lowered interest rates by 75 basis points, three-quarters of a percentage when the global economy seemed to be in danger. This should be viewed as a partial reversal of those changes a year ago. ''I believe that Mr. Greenspan has been very consistent over an extended period of time telling us that he believes that the economy is sound and that investors should be thinking about whether stocks are reasonably valued and he made a point of not making a statement on that issue on Friday. ''What he indicated was that normally the economy will drive asset prices, that is, home prices and stock prices, and he is of the opinion that more recently home prices and stock prices are also having an effect on the economy. That is, as those prices go higher, consumers are spending more of the equity that they have in there. And so, I think Mr. Greenspan is letting us know that he's watching. ''He's saying that the equity market is having a mild impact (on the U.S. economy), didn't specify it, but he did indicate that the rise in home prices is having a larger impact than is the rise in stock and bond prices. Keep in mind that something like 60 percent of U.S. households have no exposure to the U.S. stock market and so were are seeing that some homes, some households, some individuals, are having a very dramatic impact on their income and their wealth from the stock market, but that is by no means a widespread or necessarily an average phenomenon. ''Clearly, there are many analysts who believe that if the stock market were to go down dramatically in price and stay there, that would have a negative impact on economic growth. Consumers would feel less comfortable and businesses would feel less comfortable about making investments in new plant and equipment. And so one of the things Mr. Greenspan did do on Friday was to remind us that we're all connected in a very circuitous way.'' On expectations for U.S. interest rates: ''The Federal Reserve controls short-term interest rates and so far they have been moved up by one-half a percentage point. Long-term interest rates which get driven by markets and investors' expectations have already moved up a percentage and a half, and so we think that another rise in short-term rates is already discounted in the marketplace. There are many investors who expect those rates to go up, perhaps not in October at the next FOMC meeting, but perhaps sometime thereafter.'' On the outlook for stocks: ''I believe that what drives stock prices ultimately is how long the economy can continue to grow, generating good profits and jobs which gives us that momentum in the economy. And as we take a look into 2000, we don't see it ending. We think that this is an economy that will continue to generate jobs and profits. Stock prices, we think, will continue to rise roughly in concert with the improvements in corporate profits.'' On the proposal by Republicans in the U.S. Congress to cut $792 billion in taxes: ''Congress should be very careful about the tax cut that's been proposed. Let's keep in mind that the budget projections are always very hard to do and those surpluses may turn out not to be quite as large as expected, number one. And number two, we do have a very large national debt. I think there are many economists who would prefer a larger portion (of the) surplus, whatever it turns out to be, be used to pay down the debt.''