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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Bull RidaH who wrote (30467)	10/6/1998 4:46:00 PM
From: Brad Bolen	Read Replies (3) \| Respond to of 94695

Oh yes, and I forgot to mention...what happens if YHOO disappoints tomorrow? B>

To: Bull RidaH who wrote (30467)	10/6/1998 4:51:00 PM
From: Brad Bolen	Read Replies (1) \| Respond to of 94695

POLL - Analysts see gloomier U.S. economy ahead By Elizabeth Lazarowitz NEW YORK, Oct 6 (Reuters) - The financial turmoil that has swept the globe shows little sign of arrest, suggesting more storm clouds on the U.S. economic horizon than previously forecast, according to a Reuters survey. While the word ''recession'' has not yet entered into most analysts descriptions of the U.S. economy, economists in the survey saw annual growth falling from a 3.0-percent rate for 1998 to a 2.0-percent rate in 1999. In recent weeks, Wall Street has been inundated with bad news, from a disappointingly small quarter-point Federal Reserve interest rate cut to the huge losses and bailout of a major U.S. hedge fund. As a result, analysts have begun trimming their forecasts for U.S. gross domestic product growth. ''We most definitely had higher numbers before,'' said Carol Stone, chief economist at Nomura Securities. Stone said she is working on a forecast that will likely show the U.S. economy struggling to reach a 2.0-percent growth rate throughout much of 1999. When Asia's economies first fell ill more than a year ago, many analysts expected the U.S. manufacturing sector would feel the effect in slower net exports. But they voiced confidence that the vigorous domestic economy would largely weather the storm. Now, however, amid tumbling U.S. stock markets and hints of weakening consumer confidence, analysts are projecting a deeper drag on U.S. Gross Domestic Product growth. ''These financial market difficulties are no longer abstractions very far from the United States,'' said Peter Kretzmer, senior economist at Nationsbanc Securities, Inc. ''They involve the U.S. markets.'' On average, 22 economists polled by Reuters said GDP would grow by 2.5 percent in the fourth quarter of 1998, but then slow to 1.8 percent growth in the second quarter of 1999 before edging up again. That's a more pessimistic view than seen in a July Reuters survey, in which analysts predicted GDP would rise at a 2.8 percent rate in the current third quarter of 1998 and sustain 2.4-percent growth throughout 1999. Analysts pointed to the near-collapse of the Long-Term Capital Management hedge fund as strong evidence that the United States might not be immune to the global slowdown. The fund had pooled money from rich investors and banks to make huge speculative investments. The bets went bad as troubles in Asia and Russia roiled global markets and sent U.S. Treasury bonds to record low yields, slashing the value of their portfolio. Late last month, New York Fed officials, fearing the fund's collapse would weaken the banking sector, organized a $3.6 billion bailout by major commercial and investment banks. An earlier sign of looming danger was Russia's default on some domestic debt in August, said Dan Seto, senior economist at Nikko Securities, Inc. The ensuing losses showed that U.S. investors' and financial institutions were vulnerable to foreign developments, Seto said. ''It was like an alarm clock going off,'' said Seto, who sees the economy slowing to a crawl in mid-1999. ''It was a clear sign that the global financial turmoil had reached American shores,'' he added. Other financial institutions could follow LTCM on the road to ruin and even plummeting interest rates may fail to prop up the economy if a credit crunch is on the horizon, Seto said. ''If banks are concerned about their own financial health, they are not going to aggressively try to lend out money if they need that money to cover some liabilities,'' he said. Analysts are also warily eyeing consumer confidence measures, suspicious that, despite tight labor markets, slumping stock prices might scare consumers into spending less. The Conference Board's consumer expectations index has fallen steadily from 116.2 in June to 95.9 in September. An 11-point drop last month pushed the index to its lowest point in more than a year. In addition, weakened corporate earnings could bite into investment growth, analysts said. Individual results of the survey follow: Company Q398 Q498 Q199 Q299 Q399 Q499 1998 1999 CHNGE? 4Cast 2.8 3.5 2.0 2.0 1.0 1.0 - - - Barclays 3.5 2.5 2.0 1.5 2.0 2.0 3.3 1.9 - Bear St - 4.1 2.0 2.4 2.3 2.6 3.0 2.5 - BT Alex 2.5 3.0 2.5 2.5 2.5 2.5 3.0 2.4 - BTM 2.1 2.8 - - - 2.5 - - - CS FB 2.9 2.6 - - - - 3.2 1.4 - Daiwa 2.3 2.5 2.3 2.2 2.4 2.3 - - - Dean Witt 1.5 - - - - - - - - Goldman 2.5 3.2 - - - - 3.2 1.7 N I.D.E.A. 2.0 2.0 - - - - 2.9 1.9 Y JP Morgan 2.0 1.0 1.0 - - - - - - Lehman 2.0 2.0 - - - - - - Y MCM Money 2.5 2.0 - - - - - 2.5 - Mellon 2.5 2.8 1.4 1.5 2.6 2.5 3.1 1.9 Y Merrill 1.4 2.2 1.3 1.5 1.6 1.7 2.7 1.5 Y Morgan 3.2 3.5 2.0 2.2 2.2 1.7 3.6 2.3 - Nationsbc 2.3 2.1 1.5 2.0 2.6 2.8 2.9 2.3 Y Nikko 2.5 1.0 1.7 0.4 1.1 1.4 2.7 1.1 Y Nomura 2.0 2.2 - - - - 2.9 - Y PaineWebb 2.5 2.8 2.5 2.4 2.3 2.4 3.1 2.5 N PNC Bank 2.0 2.3 1.9 1.5 1.5 2.0 2.9 1.8 N Scotia 2.5 - - - - - 3.0 - Y ------------------------------------------------------------ Forecasts 21 20 13 12 12 13 15 14 Averages 2.4 2.5 1.9 1.8 2.0 2.1 3.0 2.0