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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (19284)	8/13/1998 4:57:00 PM
From: IQBAL LATIF	Respond to of 50167

Goldman's Cohen holds client hands in turbulence NEW YORK, Aug 13 (Reuters) - Goldman Sachs market strategist Abby Joseph Cohen soothed ruffled clients in a conference call on Thursday, reiterating her bullish stance despite the recent rockiness in world markets. Cohen, one of Wall Street's most respected forecasters, said she is not changing her stock market targets nor her earnings projections. She said stocks are in the bottom of a trading range, recently shocked by concerns about fallout from Asia and Russia. But she said that the direct impact on the United States has been, and will likely remain, only moderate. ''Our economic forecast continues to call for ongoing global growth,'' she said in a research note summarizing the call. Despite the recent sell-offs in world markets, particularly the Russian stock market overnight, she said Asian disruptions in recent quarters hurt U.S. Gross Domestic Product (GDP) growth by only about 0.5 percent, ''a modest negative''. Cohen also made reassuring comments about those who feared the crisis might hit U.S. banks hard. She said most indicated they are now fully reserved for losses in Asia, based on Goldman's discussions with bank managements that chose to comment. Also helping out, she said, U.S. banks have been mostly focused on transactions processing in Asia, not high-risk lending. In one study in Thailand and elsewhere, half the bad loans were made by Japan, 35 percent by European banks, and ten percent by U.S. banks, she said. Cohen is sticking to her stock market targets, predicting the Dow industrials will easily achieve 9300 by the end of the year and the Standard & Poor's 500 Index will easily meet 1150. Her S&P 500 12-month rolling target is 1250. ''Stocks are now undervalued,'' she said, ''creating opportunities'' based on the recent declines that have pushed the S&P 500 back to the bottom end of the trading range that has persisted since April, she said. She said Wall Street has generally taken a discouraging view of profits in the first half, which seems to her misplaced. U.S. corporate profits slowed in the first half, but that was no surprise, and the earnings were a solid six percent for the Standard & Poor's 500 index she said. The bleaker view, she said, was caused by a large disparity in the results from different sectors, late results from the strong retail industry, and write-offs by some high profile companies. Worst hit by the Asian crisis, she argued, are companies producing commodities, including energy, metals and DRAMs (Dynamic Random Access Memory) computer ships. But many sectors boosted profit margins because of lower costs from Asian suppliers. And companies with exposure to strong domestic markets fared well in recent months. Goldman is expecting a similar rate of profit performance in the third quarter but a notable acceleration in the fourth quarter. That view, initially made in 1997, was based on two assumptions: that the global economy would begin to improve by year-end and that year-on-year comparisons become easier in the fourth quarter. Still there seemed to be some concern at Goldman about the performance of the global economy in 1999. ''We will review the first assumption in the coming weeks, but the second seems intact,'' she said. For now, Goldman does not expect devaluations in currencies in China or Hong Kong this year, she said. On the Japanese yen, she said ''most of the decline ... has already occurred. She said Goldman does not expect global recession or a big swing in inflation in the coming year. --------------------------------------------------------------------------------