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September 21, 2000

Goldman's Cohen Pumps Up Market; Leaves Allocation Unchanged
By David A. Gaffen, The

Cohen's Comments Don't Change Fundamentals ... Weiss comments

NEW YORK - Having lost all of its August gains in the first two and a half weeks of September, the equity market got a shot in the arm this morning from one of its most long-term bullish names, Goldman Sachs' chief strategist Abby Joseph Cohen.

The Goldman strategist today reiterated her current equity allocation and said the market's concerns about oil, the euro and earnings are "overdone." She said the intermediate and long-term view on the market remains "bright."

Participants will be watching to see if Cohen's comments, which have been market-movers in the past, have a positive effect this morning.

Cohen's horizon is a long-term one, but the market's been eager to trade on her calls since her bullish comments helped steady the market in August 1998, amid the Asian crisis.

Though Ms. Cohen's comments have been known to bolster the market from time to time, today's comments will not be able to sustain the type of rally needed to recover from the past week's slump. The bad news continues to pile up and the economic outlook is not getting any rosier.

Here are the details:

  • Petroleum production is near full capacity with only Saudi Arabia able to increase pumping.
  • Oil inventories in the U.S. are near record lows and decreasing every day as winter approaches.
  • The euro fell to an all-time low against the dollar during trading yesterday, and nothing short of a full-scale intervention can reverse its declines.
  • The Fed's "beige book" report yesterday indicates that economic growth continues to slow down, and, in some regions, the tight labor market is beginning to drive up wages.
  • Moreover, several companies have issued earnings warnings in the past few days, citing high oil prices and the weak euro and reduced demand as causes. Just this week, Gillette, Goodyear, Morgan Stanley Dean Witter, and Sprint joined the list of companies expected to report less than stellar earnings for the third quarter.
The Dow had a slight boost this morning, but it is struggling to stay afloat. The Dow has been on a slide for the past six days. Furthermore, the Nasdaq is headed lower in trading today. Yesterday's bump was clearly not strong enough to sustain a tech stock rally. And, clearly, one analyst's wishful thinking is not going to be enough to turn around this market.
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