Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Mon, Jul 20 1992 Date: Mon, 20 Jul 92 04:12:10 EDT Message-ID: 07-20 0000 DECISIONLINE: Personal Investing USA TODAY Update July 20, 1992 Source: USA TODAY:Gannett National Information Network WALL STREET COOL TOWARD IBM: IBM reported red-hot second-quarter earnings Friday, but Wall Street - expecting even better results - cooled on Big Blue. IBM shares slumped 5 1:4 to $95 in heavy trading Friday after the computer maker posted earnings of $714 million, or $1.25 a share. That was a 466% surge from the same period last year, when IBM posted earnings of $126 million, or 22 cents a share. EARNINGS WEREN'T UP ENOUGH: Although IBM's second-quarter earnings, posted Friday, were up 466% over last year's second quarter, investors still were disappointed. Analysts expected per-share earnings of $1.30 to $1.35, better than the actual $1.25. Several now worry the company's earnings will drop the rest of the year, crimped by increasing competition. SELLOFF SIGNALS MORE TO COME: If money manager Randy Updyke is right on, Friday's sharp sell-off in stock prices is just the forerunner of a wicked decline that will cut leading market averages in half in two to three years. It means, he says, bank certificates of deposit and money market funds - despite their puny yields - are a lot more attractive than they look. He's been saying that for 2 1:2 years. (For more, see special Updyke package below.) GREENSPAN FACES TOUGH QUESTIONS: Federal Reserve Board Chairman Alan Greenspan can expect tough questions Tuesday when he makes one of his twice-yearly reports to Congress. As the USA faces rising unemployment and a weak recovery, members of Congress likely will grill Greenspan on why the Fed didn't move more quickly to cut interest rates and if, when it did, it was caving in to election-year pressure from President Bush. U.S. SURGICAL INSIDERS SELL: Executives and directors at U.S. Surgical are raising millions selling their stock in the company. In early June, 14 insiders at the surgical-products maker sold almost 178,000 shares of U.S. Surgical for $20 million. But for analysts who follow U.S. Surgical, the selling is no big worry. They've created "tremendous wealth," says analyst Glenn Reicin; of course they want to sell. MONEY MARKET MUTUAL FUNDS LOW: Money market mutual funds are the lowest since the funds were created in 1973, according to IBC:Donoghue's Money Fund Report. Yields in May, annualized percent, were 3.51%. That's down from a 1981 peak of 16.82%. Since then, yields have dived to the 7% to 8% range, dropping in 1991 to 5.71% from 7.82% in 1990. BROKER'S ACTION BELIED WORDS: Last July, securities analyst Bert Boksen sold 10,000 of his own shares in Cascade International while recommending the stock as a buy, a lawsuit says, Bloomberg Business News reported Friday. A month later, his firm, Raymond James & Associates, lowered the rating to a hold. Six days later, Boksen sold all 12,700 of his remaining shares; a month later, Cascade filed for bankruptcy. SAHARA WON'T MAKE DISTRIBUTION: Sahara Resorts and Sahara Casino Partners L.P. announced Friday that the partnership will not make the distribution of $.28 per publicly traded unit for the third quarter ended June 30. The next scheduled distribution is in November, for the quarter ending Sept. 30. Under the terms of the partnership, distribution payments may be deferred and do not have to be made quarterly. GOLD, SILVER UP: With the dollar's fall, precious metals were up Friday. Gold rose to $357.50, up $4.90, on the Commodity Exchange. Republic National Bank quoted gold at $357.50, up $5.20. Gold rose in London to $358.50, up from $352.75 bid. Silver rose in London to $3.97 a troy ounce, up from $3.92, and on the Comex, silver rose to $3.971 from $3.908. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Monday at 3331.64 after closing down 29.99 Friday. The New York Stock Exchange composite opens at 228.51, down 0.98. The American Stock Exchange market value opens at 386.55, down 1.79. The NASDAQ OTC composite opens at 570.52, down 5.67. SPECIAL PACKAGE ON UPDYKE: ECONOMY IS SINKING: Money manager Randy Updyke may be on target with his predictions of a stock-market decline. The economy is sinking, and there's too much debt out there to revitalize it for the next several years. Stocks are getting killed on bad news. And when stock valuations are as high as they are now, the market always retraces. It has grown at a compound rate of about 17% a year the past 10 years. THE BULL MARKET IS OVER: Updyke says thick bearish sentiment (a contrary indicator) and recent interest-rate declines could push up stocks the next few weeks. "But once it becomes apparent the economy can't turn, that will represent the denouement of the bull market," he says. He feels many stocks already are hurting. A Merrill Lynch sampling of 2,300 stocks finds 31% are off 40% or more from their '92 highs. CLINTON WILL WIN - THAT'S BAD: Updyke predicts that Bill Clinton will win the election; he says that Bush is "talking about lowering the capital-gains tax while ... 10 million people are out of work." But a Clinton presidency could hurt the market, he says. Consider stepped-up efforts to cut health-care costs, leading to lower drug prices and lower drug-company profits, as a possible occurrence. (End of package.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing editor: Beth Mann. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM