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To: H. Wai who wrote (46122)	5/6/1998 7:30:00 AM
From: Glenn D. Rudolph	Respond to of 61433

Rubin Urges Investors to Study The Stock Market With Rigor By DAVID WESSEL and JACOB M. SCHLESINGER Staff Reporters of THE WALL STREET JOURNAL WASHINGTON -- Treasury Secretary Robert Rubin, though careful not to assert that the stock market is overvalued, urged investors to employ more "rigor" in evaluating the market's current level. "I think in good times people tend not to be very rigorous in terms of how they go about the process" of evaluating whether the stock market is appropriately valued, given the economic outlook, he said in an interview Tuesday with The Wall Street Journal and CNBC. "Rigor is always appropriate when investing in markets, whatever the ultimate conclusions may be." The former investment banker said any examination of the stock market involves two questions. The first: Where is the economy going? "Far and away the most likely scenario is a continuation of solid growth and low inflation," he answered. "The second question is, whatever your assumption may be about the economy, how do you believe the market is valued relative to the economy?" And what does he think on that key question? "I don't think the secretary of the Treasury should respond on that particular issue," Mr. Rubin said with characteristic caution. Top administration and Federal Reserve officials privately express concern about the stock market's remarkable rise, but they are careful what they say in public for fear of being blamed for triggering a market crash. In Tuesday's interview, Mr. Rubin also reiterated the U.S. view that Japan's latest fiscal stimulus package is "a very positive step," but cautioned that "implementation is key." He added, "What they need to do is not depend on the yen falling to generate export-led demand, but just the opposite. What they need to do is generate domestic demand-led growth." Mr. Rubin's remarks that Japan shouldn't rely on a weakening yen pressured the dollar. The Dow Jones Industrial Average, meanwhile, pulled back from Monday's record to close at 9147.57, down 45.09, and a bond-market decline pushed the 30-year Treasury yield back up toward the 6% mark, at 5.98%. Separately, President Clinton met Tuesday afternoon for about an hour with Fed Chairman Alan Greenspan at the White House's invitation. It was their first official face-to-face meeting since January 1997, two months before the Fed last raised short-term interest rates. The pair met more frequently earlier in the Clinton administration. The purpose was "to exchange views on the national economy," said White House spokesman Michael McCurry. Officials had no immediate comment after the talks. Word of the session, which also included Mr. Rubin and Vice President Al Gore, sparked speculation that the Fed chairman might be alerting the president to the possibility of an interest-rate increase later this year -- unless the economy slows down soon. As reported earlier, Fed officials at their March 31 meeting agreed that their next move was more likely to be a rate increase than a rate decrease and, in speeches and interviews, officials have begun to talk about the possibility of a rate increase. Earlier in the day, Michel Camdessus, managing director of the International Monetary Fund, told a conference in Melbourne, Australia, that the U.S. will have to act soon on interest rates to curb its "exuberant" stock market. "They will have to move sooner rather than later; the question is to know when," he said. In contrast to some other meetings between Mr. Clinton and Mr. Greenspan, word of this one was announced to White House reporters in advance by Mr. McCurry, apparently to combat a report that the two men were going to meet with bankers. Mr. Rubin, who is periodically rumored to be contemplating stepping down, said he plans to remain in his job "for quite some time." Asked if that means he expects to continue as Treasury secretary through the end of this year, Mr. Rubin said, "I most certainly do."