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, May 18 1992 Date: Mon, 18 May 92 05:21:50 EDT Message-ID: 05-18 0000 DECISIONLINE: Personal Investing USA TODAY Update May 18, 1992 Source: USA TODAY:Gannett National Information Network BULL SEES DOW CLIMBING HIGHER: While bears and worrywarts are everywhere, Ralph Acampora, Prudential Securities' chief of technical analysis, says he's bullish. "I'm pounding the table to buy," he says. "I'm the most bullish I've been since the gulf war in January 1991 (when the Dow was 2470). Everything is coming up roses." He sees the Dow Jones industrial average jumping to 3700 to 3800 by year's end. (For more, see special Acampora package below.) O&Y BANKRUPTCY HURTS STOCKS: The stock market fell broadly Friday after Olympia & York, the world's largest development company, filed for bankruptcy protection in Canada and the United States. The Dow Jones average of 30 industrials fell 15.79 points to 3,353.09. It tumbled 16.32 for the week. The bond market rallied on the Olympia & York news and speculation the Federal Reserve might ease interest rates. FANNIE MAE EXPECTED TO FLY: Money manager Graham Tanaka sees shares of the Federal National Mortgage Association, the No. 1 investor in residential mortgages, rising 30% in a year. Friday's close: $63 1:4. Like many growth stocks, Fannie Mae has been hit this year - off 8%. Tanaka sees big earnings growth For Fannie Mae - 15% a year the next three to five years, vs. estimated growth of 8% or less for the S&P 500. STOCK SEEN RISING TO $133: Money manager Graham Tanaka forecasts earnings of $5.80 a share this year for the Federal National Mortgage Association. Next year: $6.70. Twelve-month stock target: $82. Three-year target: $133. Fannie Mae Chief Financial Officer Timothy Howard also sees double-digit earnings growth the next three to five years. He rates Tanaka's '92 earnings estimate reasonable but wouldn't discuss '93. RATE CUT MAY TAKE A MONTH: Economists say the Federal Reserve isn't likely to cut rates after its policy-making arm, the Federal Open Market Committee, meets Tuesday. But there is a chance the Fed will move to ease interest rates in the next month if the economy looks like it's faltering. A report Thursday showing a jump in the money supply dashed hopes for an immediate rate cut. GM CUTTING COSTS: GM is eliminating 13 of its 20 basic frames used to build cars and trucks, a cost-cutting measure taken as part of its huge restructuring plan. Eliminating frames will help GM cut development costs and shorten the time it takes to introduce new models. Chairman Robert Stempel told analysts about the cost-cutting move last week at a meeting to discuss GM's upcoming stock offering. GROWTH FORECAST: The economy should grow 3.6% next year from a modest 2.1% this year, the Organization for Economic Cooperation and Development predicts. The OECD, a think tank of 24 industrial nations, meets Monday for its annual conference. The group forecasts that Japan's economy will grow no more than 1.8% this year after expanding 4.5% last year. ART PRICES COULD BE DEPRESSED: Despite some success at last week's auctions at Christie's and Sotheby's, some top U.S. art collectors remain wary, reports USA TODAY columnist Dan Dorfman. The big problem: Japanese art dealers are said to be sitting with an estimated $5 billion inventory, notably impressionists. Some say that could depress prices - already down 40% to 50% from '89 highs - another 10% to 15%. GOLD PRICES MOVE HIGHER: Gold prices rose worldwide Friday. On the New York Commodity Exchange, gold bullion for current delivery settled at $338.70 a troy ounce, up 70 cents. Republic National Bank of New York quoted a late bid for gold of $338.50 an ounce, up $1.15. Gold also rose in London and Zurich. On New York's Comex, silver bullion for current delivery settled at $4.086 a troy ounce, down from $4.107. SPECIAL PACKAGE ON ACAMPORA: DOW SEEN HITTING 4000 NEXT YEAR: Prudential Securities chief of technical analysis Ralph Acampora, who sees the Dow jumping to 3700 to 3800 by year's end, says it will move on to 4000 by next year's first quarter. Friday's close: 3353. His rosy forecast is spearheaded by what he calls Dow power. Acampora is bucking a lot of other technical experts who chart price and volume trends of stocks and market indexes. EXPERTS HAVE THE JITTERS: Experts who chart price and volume trends to determine the course of stock prices are increasingly jittery, given: Failure of the Dow transportation average to follow the Dow industrials to highs; bad market breadth the past few months, a reference to the number of advancing stocks vs. decliners on the NYSE; a hefty sell-off in the NASDAQ composite - about 11% from February. DOW TO PULL UP OTHER INDEXES: Acampora rejects such worries. "It's also only a matter of time, maybe a couple of months, before the Dow pulls the other averages into new high ground," he says. His rationale: A usually strong market in the second half of a presidential-election year; a strong bond market; the right kind of leadership to push stocks higher - namely blue-chip America; a rising Dow utility average. BUY ON WEAKNESS: Of 30 Dow industrials, 21, or 70%, are economically sensitive. "Given Dow leadership, it suggests loud and clear that the economy is coming back," Acampora says. He adds that any near-term sell-off, if there is one, will be modest, maybe 4%. "But any near-term weakness is a buying opportunity." Acampora says he likes United Technologies and McDonald's over the next 12 months. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Monday at 3353.09 after closing down 15.79 points Friday. The New York Stock Exchange composite opens at 212.01, down 0.62. The American Stock Exchange market value opens at 390.37, down 1.42. The NASDAQ OTC composite opens at 574.43, down 2.03. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution 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. 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