To: Frank Ellis Morris who wrote (63188 ) 9/2/1998 10:32:00 AM From: Mohan Marette Respond to
Listen up people here comes Abby 'The Bull' Cohen again-BULL,BULL,BULL.Wall Street "Bull" Abby Cohen Reacts To Rebound SUSIE GHARIB: Well, our guest tonight is one of Wall Street's most respected strategists and she's still bullish about stocks. Abby Joseph Cohen of Goldman Sachs is the co-chair of the firm's investment policy committee. And as we told you earlier, she raised her asset allocation today to 72 percent in stocks. She also told clients we expect little impact on U.S. economic growth, corporate profitability and cash flow. ABBY COHEN, CO-CHAIR, INVESTMENT POLICY COMMISSION, GOLDMAN SACHS: Susie, for more than 10 years, there's been a very wide gap in the Commerce Department profits and the profit data that most investors look at. For example, S&P 500 profits have been rising at a 5 to 7 percent annualized rate in recent quarters and those of course are the numbers that we use in our work. Many companies have begun preannouncements. This is something we have seen now for several different quarters and it's something that is more of a policy. They want to get the bad news out first. We think that third quarter profits will be roughly on par with what we saw in the first half of this year. GHARIB: And that's even with all of the problems that are going on in international economies. Russia, Japan, possibly Latin America and the impact of that on American companies. How do you explain that away? COHEN: Because the biggest problem for us in terms of the global economy is Japan and the rest of Asia, and has been now for more than a year in emerging Asia and for several years now in Japan. In terms of the size of their economy and the proportion of our trade, that's enormous. And it's something that is already factored into profits and to our work. Russia, our trade with Russia, is less than 1 percent of the total. The nations in Latin America that may now be having problems represent less than 3 percent of our trade. It's Japan, the rest of Asia, already weak, already factored in. GHARIB: All right. Abby, what would it take for you to turn bearish? What would have to happen? What would worry you enough that you'd tell your clients it's time to sell? COHEN: We have been concerned about the global economy now for more than two years so this is what we have been monitoring and looking to see if it was getting worse on the margin. Our belief at this point is that the major economies that matter to us are not dramatically worsening. That would include Japan. GHARIB: All right, you told your clients in this report today that you're still very keen on technology stocks and financial stocks and some stocks in the retail sector. Tell us why those groups and specific names. COHEN: Those three sectors have been very hard hit in recent sessions and we think enormous value has been created. Among the banks for example, in financial services, NationsBank (NYSE:NB), NB&A. Technology, a wide variation of possibilities. Microsoft, (NASDAQ:MSFT), Automatic Data Processing (NYSE:AUD) and among the domestic cyclicals, retailers like Federated (NYSE:FD), airlines like Delta (NYSE:DAL). GHARIB: OK. Thank you very much for coming and we really appreciate you giving us your insight on this wild market we've been having. And we've been speaking with Abby Joseph Cohen of Goldman Sachs.
