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To: limtex who wrote (8456)	10/5/1998 2:40:00 PM
From: Jim Pasinato	Read Replies (1) \| Respond to of 12468

Dear Limtex, Saw this on the CNNfN site today: Goldman Sachs' Cohen sees good returns on equities, moderate growth for U.S. October 5, 1998: 12:43 p.m. ET WASHINGTON (Reuters) - Goldman Sachs' Abby Joseph Cohen said Monday that the U.S. stock market and corporate bonds are undervalued. "At today's stock prices, we think the S&P 500 is moderately undervalued based on our view for 1999," Cohen said in a speech to the National Association for Business Economists. "We believe that corporate bonds are undervalued relative to U.S. Treasuries based on our view for 1999." Cohen said her team thought that the stock market was "roughly at fair value" this summer, but she said after stock prices "significantly declined," she believed the undervaluation that had marked stock prices in the early 1990s had been re-established. The team thought that the stock price decline had caused a 12 to 15 percent undervaluation in the Standard and Poor's stock index, she said, "and we still believe that to be the case." U.S. to see moderate growth Cohen said that implicit in the current stock market prices is a belief that the U.S. economy is headed into a recession. But she disagreed with that outlook, saying the U.S. economy -- which she described as a "supertanker" -- would weather the financial crisis abroad and record moderate growth. "We believe the current valuations in our financial markets make sense only in an environment where the U.S. economic expansion is over, and we don't think so," she said, noting that the valuations would make for "good" returns on equity. Cohen said that the economic woes in other countries no doubt will damage the U.S. economy, but perhaps not as much as many analysts assumed. She said that while export markets will suffer, U.S. corporations have strength in "value-added" areas such as technology and entertainment, which are less sensitive to potential global price declines than other more traditional export sectors. She added that healthy but perhaps more moderate demand within the U.S. economy itself will help support profits.