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To: Sonny McWilliams who wrote (45950)	1/18/1998 3:28:00 PM
From: Barry Grossman	Read Replies (4) \| Respond to of 186894

Sonny and John, Perhaps the reporter from the AP was listening to Abbey when he sat down to write this: newsday.com Wall Street May Face Soft Landing By CHET CURRIER AP Business Writer NEW YORK (AP) -- Veterans of the great bull market for stocks will recognize a familiar phrase as talk begins to stir on Wall Street of a "soft landing" for the economy in 1998. The term embodies an important principle that has helped stock prices to soar all through the 1980s and '90s. Instead of a recession or credit crunch every three or four years, the U.S. economy seems to have found a way to smooth out the bottom part of the economic cycle. There was, by official measurements, a recession that lasted two or three quarters in 1990-91. Otherwise, every time the pace of business activity has slowed over the past 15 years, the economy has managed to pause and recover its strength without any serious upsurges in unemployment, inflation or interest rates. The expansion of gross domestic product, or the total output of goods and services, has slowed, but not stopped or turned negative, as the economy has weathered such jolts as a precautionary tightening of credit conditions by the Federal Reserve Board. Hence the description "soft landing," for a maneuver that gets a high-flying economy back to earth without damaging the equipment or shaking up the passengers very much. Now, a new source of turbulence looms in the form of the Asian financial crisis, which has already begun to dampen demand for U.S. exports and to chill the expansion plans of a good many international businesses. That has set economists to lowering their predictions of U.S. GDP and corporate profits this year, and to debating the chances for a painful spell of deflation spreading outward from commodity prices to incomes, profits and maybe the values of financial assets like stocks. "The Asian crisis has converted deflation from a theoretical risk into a clear and present danger, in my opinion," says Edward Yardeni, chief economist at Deutsche Morgan Grenfell Inc. in New York. A soft landing could save the day, however. In the optimists' scripts, the U.S. economy proves able to weather the storm because of its many strengths, including robust consumer optimism, technological innovation and improved productivity. As investment managers at Bessemer Trust put it, "We will in all probability see some short-term market effects as a result of the recent events in Asia. We should not, however, confuse the disruptions in those countries with the fundamental soundness of the U.S. economy. "Positive trends in employment, personal income, inflation and profit margins are not likely to reverse as a consequence of a slowdown in Asia. Growth will slow but it does not portend a recession." Quite possibly, the Fed will lend a hand by nudging short-term interest rates lower to stimulate the flow of money through the banking system. "Our forecast for 1998 implies that the U.S. economy will have its second soft landing in four years," says Hugh Johnson at First Albany Corp., a regional brokerage firm based in Albany, N.Y. "Although the risks are higher, we continue to believe that stock prices will be modestly higher at yearend." The risks do appear to be pretty high, in part because investors' confidence in the chances for happy outcomes such as soft landings has become so pervasive. In decades past, the stock market became famous for anticipating more recessions than actually occurred because it was so quick to shrink back at the mere possibility of a slump. By contrast, at its current levels it gives little evidence of discounting such a prospect. So if a recession were in the offing this time, investors might be caught by surprise, and stock prices might have to decline considerably to take it into account. ----------------- I am definitely an optimist. How about ya'all? Barry

To: Sonny McWilliams who wrote (45950)	1/19/1998 8:53:00 AM
From: Road Walker	Read Replies (1) \| Respond to of 186894

Sonny and Mary and ????, re: Analysts I was not defending analysts in general. I think their calls on the market or on specific stocks are usually suspect or worthless, for the many reasons given on this thread. The point I was trying (unsuccessfully) to make was that if you act on analysts recommendations, then one that is always bullish is completely worthless, as stock go both up and down. You can make up your own mind to be always bullish without their help. That said, I read analyst recommendations very carefully not for what they recommend, but for WHY they made their recommendation. They often have some information that I don't, or a different perspective on information I know. In this way they do add value. Really the same reason I carefully read this thread. John