Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (17343)	9/3/1998 10:13:00 AM
From: Alex	Read Replies (1) \| Respond to of 116790

Up? Down? Market gurus weigh-inPrognosticators Henry Kaufman and Elaine Garzarelli take two different tacks on the market's short-term outlookBy Robin Sparkman MSNBCSept. 2 -On CNBC Wednesday, two renowned market-watchers offered dramatically different scenarios for stocks in the coming months. Noted economist Henry Kaufman predicted a gloomy outlook for the market saying that as a result of global economic problems, U.S. stocks could drop another 10 percent. But Elaine Garzarelli, who manages her own investment firm, Garzarelli Investment Management, offered a more bullish assessment. Declining rates on the 10-year bond will provide the "fuel" for stocks to recover. ÿ International economic consultant Dr. Henry Kaufman says that he sees further declines in the stock market, which will bring the U.S. close to a recession. ÿ ÿ ÿ ÿKAUFMAN, WHO was known as "Dr. Doom," at Salomon Brothers in the 1980s for his negative outlook on the market, expects the recent U.S. stock market losses to reverberate around the world. He said the market's downturn will hurt consumer spending, capital spending by business and spread to countries that are economically dependendent on the United States. "Growth in the United States will be slowing as we go into next year and a further decline in the equity market will bring us close to a recession," he said. ÿ ÿ ÿ ÿProblems abroad are equally alarming, said Kaufman. He pointed to Russia and Japan's economic woes as areas of concern and said the world's next trouble spot is Hong Kong. Last week the Hong Kong Monetary Authority futilely tried to prop up its battered stock market and ward-off speculators. Kaufman said the move was, "A very difficult thing to do and it is really a sign of weakness and not a sign of strength." ÿ ÿ ÿ ÿWhile Kaufman stressed the importance of the global economic environment as an indicator of future U.S. stock prices, Garzarelli looked to other criteria. Formerly of Lehman Brothers, Garzarelli is widely credited with accurately predicting the historic market crash of Oct. 19, 1987. In her CNBC interview Wednesday, she said the rate of the 10-year bond was the most critical indicator for predicting the market's direction. Garzarelli said that assuming inflation continues to drop, she expects the 10-year-bond to come down to 4-4.5 percent. This low level, she says, will spur investors' appetite for stocks. <Picture><Picture><Picture><Picture>Market analyst Elaine Garzarelli says that the market could bouce back if inflation disappears and the 10-year bond rate falls to 4 to 4 1/2 percent. ÿ ÿ ÿ ÿIf a bounce does occur, Garzarelli said she would look for bargains in the technology and financial sectors. Her top picks include Lehman Brothers, BankBoston, Chase Manhattan and Travelers Group. She was undeterred about the banks' trading losses from their Russia positions saying stock prices were already "discounted" for those setbacks. ÿ ÿ ÿ ÿBoth Garzarelli and Kaufman did express concern about dwindling corporate profits. Garzarelli said her research predicted that third-quarter earnings would be down 8.5 percent. Earnings would be down 7 percent in the first quarter of 1999, 5 percent in the second quarter. She expects earnings to recover in the second half of 1999. ÿ ÿ ÿ ÿBut this bad news isn't all negative. "The interesting thing is that in past market declines the stock market will rise when you begin to see the second quarter of down earnings."