5/28/99
"Market Monitor"-Larry Wachtel Of Prudential Securities
PAUL KANGAS: My guest market monitor this week is Larry Wachtel, senior
vice president and market analyst for Prudential Securities in New York City.
Welcome back, Larry. Volatility was certainly a major feature of the stock market
this week. Does this suggest investors are losing confidence?
LARRY WACHTEL, SR. VICE PRES., PRUDENTIAL SECURITIES: I'm not so
sure about that. Well, let's put it into perspective. We've gone through four great
years, four great months, Dow up 20 percent in the first four months, annualize
that out to 60 percent. It ain't gonna happen. Therefore there has to be some
pause. And if you want to call a pause cause for concern, I guess you can call it
that. But I simply call it a necessary pause.
KANGAS: And probably healthy and you see the bull market still alive.
WACHTEL: That's right. I think we're in a kind of a news vacuum here. You know,
the Fed is unfriendly obviously. That's a change. And we're not right into the
earnings season. And I think back to the month of April when we had a
spectacular earnings period and the market responded avidly. By the time we get
into the end of June, we'll have the sense of the second quarter. I think the
second quarter will come up in sparkling fashion in July. That's why I think that
this is a hiatus period for the next couple of weeks that could be used as a
buying opportunity.
KANGAS: So you don't think the Fed will be boosting interest rates at the late
June meeting of the Federal Open Market Committee.
WACHTEL: Not at that meeting. Maybe in the future, but they'll respond to data.
They'll respond to the job figures next Friday and then on June 16, the CPI
figures. I see unit labor costs not getting out of control. I see commodity prices
falling not rising. We had that one shot oil-related deal in April and everyone went
berserk. And I think since then the price of oil has come lower. So I don't think
the Fed is ready to pull the trigger in that late June period.
KANGAS: Going back to your last appearance with us, June of last year, late
June, the Dow was at 8944. You were still bullish and of course we've seen
11,000 plus since then. Some of your recommendations really turned out well
like Sun Microsystems (NASDAQ:SUNW) is way up and as is Hewlett Packard
(NYSE:HWP) and just today Computer Associates had good earnings and
almost got back to even. What are you doing with those stocks?
WACHTEL: Well, I'm holding Hewlett. I think Computer Associates still has
some room left on the upside. Sun Micro has come a long way. I'd be holding
those.
KANGAS: OK. All right, now we have a new feature on the program of course and
that's where our viewers get to ask our market monitors a question. Tonight the
first question is from Milton Onaka of Hawaii who watches us on KHET in
Honolulu. Mr. Onaka wants to know, if you see a market correction coming this
summer, as some other analysts do.
WACHTEL: You know, contrary to that, as I explained, I am looking for the July
period when the second quarter earnings to be a very affirmative period for the
market. My hiatus is now. Late May into the first several weeks of June. And
then I think we'll be ready for a decent move in July.
KANGAS: Now, from another viewer in Sydney, Australia, by the name of
Susanto Sjaifuddin and I'm not sure of that pronunciation, but he does watches
us on the SBS Network down under. And the question is, with more and more
central banks selling gold and others holding more U.S. dollars, how will they
hedge against any inflation and when do you predict gold might be bottoming
out?
WACHTEL: Gold has been a terrible investment, Paul. And because we have had
such a benign inflation environment, and there is always that threat of central
banks selling of gold so while it looks like it may be bottoming here temporarily, I
don't know the next central bank that makes that announcement. Meanwhile, as
a hedge against the inflation that never seems to appear, it doesn't make sense.
So I am down on gold.
KANGAS: All right. And what re you most up on what right now? What stocks?
WACHTEL: Well, you know, I'd be fishing in some troubled waters, the PC area,
the personal computer area has gotten pounded down and I think it's time to
begin taking a stand.
KANGAS: What's your favorite in the group? We just have a few seconds.
WACHTEL: Well, Dell and Compaq would be two names there. I would be buying
semiconductor stocks that apply to the telecom and the Internet, LSI Logic
(NYSE:LSI). And I think some of the drug stocks have appeal. I'm very impressed
with the relative...
KANGAS: They came back today as a matter of fact. What's your favorite in the
group quickly?
WACHTEL: Well you know the relative performance of Bristol-Myers
(NYSE:BMY) is impressive. That would be my favorite.
KANGAS: Larry, thanks very much.
WACHTEL: OK.
KANGAS: My guest, Larry Wachtel, senior vice president of Prudential
Securities.
Nightly Business Report transcripts are available on-line post-broadcast. The
program is transcribed by
FDCH. Updates may be posted at a later date.
The views of our guests and commentators are their own and do not necessarily
represent the views of Community Television Foundation of South Florida, Inc.
Nightly Business Report, or WPBT.
Information presented on Nightly Business Report is not and should not be
considered as investment advice.
(c)1999 Community Television Foundation of South Florida, Inc.
|
