Goldman's Cohen says Fed move priced in (mT)

verfasst von gg, 16.05.2000, 18:27

NEW YORK (CBS.MW) -- Goldman Sachs' chief
investment strategist, Abby Joseph Cohen, said Tuesday
that a more aggressive stance by the Federal Reserve on
interest rates is already reflected in fixed-income and equity
markets.

The Fed's policy-setting meeting, which commenced at 9
a.m., is widely expected to produce a 50-basis-point
increase in short-term rates. It would be the central bank's
first 50-basis-point hike since February 1995.

The influential and well-known market bull told clients that
such policy action will successfully prolong, not end, the
economic expansion. Her S&P 500 price targets remain
unchanged at 1,575 for year-end 2000 and at 1,625 for the
spring of 2001.

Investors, Cohen said, have digested
news of rapid economic growth in the
U.S. in recent weeks, as seen by the rise
in intermediate Treasury yields, the rise in
corporate bond yields and the poor price
action of many stocks -- including those
of banks and other interest-rate-sensitive
areas of the market.

The stock market, Cohen continued,
appears to have stabilized following
recent price declines and volatility. This
renewed stability is, she said, directly
related to the sustainability of the U.S.
economic expansion and favorable
valuations in many sectors.

Cohen continues to forecast a modest
rise in core inflation for 2000 and believes
that much of the worst inflation news is
already over.

The Dow Industrials jumped 149 points,
or 1.4 percent, to 10,958 in recent trading
while the Nasdaq Composite put on 110
points, or 3.1 percent, to 3,717. See
Market Snapshot.

Profit outlook

Cohen believes U.S. economic performance will be less
energetic in the coming months as a consequence of
interest rate increases. There are already signs that some
activities -- including retail sales and residential construction
-- may soon begin to decelerate.

Cohen concedes that upside profit surprises may be less
frequent in the rest of 2000 as a consequence of a slowing
economy, already-lifted earnings estimates as well as more
difficult comparisons as the year progresses. Still, she is
not changing her estimates for S&P 500 operating earnings
per share of $56 and $60 in 2000 and 2001, respectively.

The Goldman strategist notes that the first quarter was
extraordinary on the earnings front, with over 70 percent of
S&P 500 companies reporting results above consensus
expectations, according to I/B/E/S. This, she added, led to
an unprecedented wave of upward revisions.

In late March, Abby Joseph Cohen decreased her stock
allocation in a model portfolio by 5 percent to 65 percent,
raising the cash position to 5 percent. See full story.

Cohen's single largest overweight relative to the S&P 500
has been the financial sector. Her model portfolio is no
longer recommending an overweighted position in
technology. She suggests a combined tech-telecom
weighting of 35 percent -- which is still the largest single
sector weighting in the portfolio.

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gesamter Thread:

• Goldman's Cohen says Fed move priced in (mT) - gg, 16.05.2000, 18:27
  • Re: Dann steht der S+P schon in 2 Wochen bei 1.600... - Black Elk, 16.05.2000, 19:33
    • Re: Eins habe ich noch vergessen.. - Black Elk, 16.05.2000, 19:43
    • Re: wenn einer einen Fehler macht - Baldur der Ketzer, 16.05.2000, 20:38