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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (5292)	7/29/1998 8:37:00 AM
From: Zeev Hed	Respond to of 9980

Mike, what that commentator forgets to mention is that he is comparing prices of the S&P of last year when the long bond was above 6.25 and higher to price today when bonds are at 5.75% and lower. the difference in the bond rates justifies a premium of 10% plus 5% for the additional earnings, thus in essence "flat valuation" (year over year comparison, not absolute). Furthermore, the prices today also should reflect the consensus of "future earnings", and apart of some weakness in the present quarter, baring a recession, earning in the last quarter of this year and earning next year could improve. If interest rate decrease (the liquidity factor) then there is room for a 10% rise of the market over the next 12 months. Zeev Zeev

To: MikeM54321 who wrote (5292)	7/30/1998 3:27:00 PM
From: MikeM54321	Read Replies (1) \| Respond to of 9980

Thread, Here's another view of corporate profits. Really nothing new to the followers of the Asia Forum thread. I rewrote the article because it was all mixed up. I broke it into Q by Q analysis. It's much easier to read now (IMHO). I still don't get the math? If Q1 is 3.5%, Q2 is 3.5%, then that's 7% right there for 1st half 98. Now if you scroll down to the bottom of the article, how can First Call say full year can only be 7.2%? In order for there to be 7.2% for the entire year, then Q3 would have to be .1% and same for Q4. But they clearly aren't predicting it to be this low. Can anyone tell me what I'm missing? MikeM(From Florida) ______________________________ Hopes Fade for U.S. Second-half profit Rebound NEW YORK, July 30 (Reuters) - Hopes for a rebound in corporate profits in the 1998 second half are beginning to fade as more and more Wall Street analysts trim their profit forecasts and investor worries grow. A clearer profit picture is emerging as the second quarter reporting season draws to a close: U.S. company earnings have been above year-earlier levels, but robust double-digit growth is absent as Asia bites and the U.S. economy slows. Q2 The strike at GM cost the auto giant over $1 billion, wiping out about 1 percent of S&P 500-company aggregate earnings in the second quarter and denting U.S. economic growth, according to First Call. With 413 of the 500 companies in the index having reported earnings for the April-to-June quarter, First Call expects profits in the period to show growth of 3 to 5 percent from a year earlier, little changed from gains seen in the first quarter. Q3 Third-quarter earnings of the companies in the Standard & Poor's 500 index are forecast to rise 7.4 percent from a year earlier, down from a forecast of 10.3 percent just four weeks ago, according to First Call. I/B/E/S/ said its third quarter S&P 500-company earnings growth forecast has been cut to 6.6 percent from 15 percent at the beginning of the year. ''I believe growth will be 3 to 4 percent in the third quarter now that General Motors (GM - news) is back in business,'' Abbott said. Q4 Analysts are also beginning to cut their forecasts for fourth-quarter earnings; they now expect a gain of 13.9 percent from a year earlier, down from 15.5 percent forecast in early June, First Call said. I/B/E/S is now forecasting earnings growth of 12.2 percent in the fourth quarter, down from a forecast of 14.8 percent earlier this year. ''Analysts are crossing their fingers on the fourth quarter...'' Year At present, First Call expects full-year 1998 earnings of S&P 500 companies to grow 7.2 percent, down from growth of 11 percent in 1997.