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To: Anthony Wong who wrote (853)	10/3/1998 10:43:00 AM
From: Anthony Wong	Respond to of 1722

[BMY PFE] Salomon Smith Barney's Manley Recommends Bonds on 'Rukeyser' Bloomberg News October 3, 1998, 12:09 a.m. ET Owings Mills, Maryland, Oct. 2 (Bloomberg) -- Investors are better off staying with the bond market, Salomon Smith Barney Inc. investment strategist John L. Manley said on Public Broadcasting System's ''Wall Street Week With Louis Rukeyser.'' Manley said he's concerned about whether U.S. consumers will continue to spend at current levels and if there is a trend toward deflation. Bond yields ''could go lower,'' and the aging population ''will be helpful'' to bond investors, he said. The benchmark 30-year Treasury bond rose 23/32, or $7.19 per $1,000 bond today, cutting its yield 4 basis points to 4.84 percent. Manley said the stock market could do reasonably well ''over the very short term,'' but that there's ''a lot of potential weakness out there'' that makes early next year uncertain. These include lower earnings and the potential that capital spending levels will fall. Manley's remarks follow a recommendation made by Salomon Smith Barney early last month that investors cut their holdings in U.S. stocks and shift funds into cash because of concern that weakening global economies will hurt U.S. corporate profits. The firm recommends that investors hold 55 percent in stocks, 40 percent in bonds and 5 percent in cash. It had recommended 60 percent in stocks and 40 percent in bonds. The Dow Jones Industrial Average could fall as low as 6,500 if ''things get really bad,'' Manley said. It will eventually rebound to around the record 9367.84 it hit on July 20, he said. The Dow average today rose 152.16 to 7784.69. ''As soon as we get a sense that we've seen the worst,'' is when the market will turn around, he said. Industry Recommendations Industries Manley recommended investment in included pharmaceuticals, electric utilities and energy. In particular, Manley said he likes Bristol-Myers Squibb Co., Pfizer Inc., Peco Energy Co., Duke Energy Corp., Exxon Corp. and Schlumberger Ltd. Schlumberger, an oilfield services company, is ''probably one of the best values for a big-cap company I can find right now,'' he said. International Business Machines Corp. ''is still a very good story also,'' he said. Among the show's other panelists, Brown Capital Management President Ed Brown and Mary Farrell, chief investment strategist at Paine Webber Inc., said the market is reasonably valued. Brown recommended companies including cruise company Carnival Corp., Harley Davidson Inc. and student loan provider SLM Holding Corp. Farrell recommended IBM and Avon Products Inc. She also likes Bank of New York, which shouldn't have any exposure to hedge funds or Asian economies. --Courtney Schlisserman in the New York newsroom (212) 318-