St. Louis Post-Dispatch from St. Louis, Missouri • Page 137

MONDAY, MAY 31, 1993 ST. LOUIS POST-DISPATCH 19BP THE BOTTOM LINE Here's What Wall Street Is Saying Behind Your Back JOHN CRUDELE I think we are in the final stages of a bull market There is no upside, ff WALL STREET ANALYST Although the newspapers made excuses the next day (lessened fears of inflation and a drop in gold prices,) the real reason for the rise was that professional traders were protecting their investments. The same thing happened on May 20, the day before many of these options and futures contracts expired. Again, there was no real reason for the improvement. When stocks rise for no reason, it's sort of like a souffle.

It looks real nice while it's still puffy but there's nothing underneath to hold up the crust. Someday the stock market will suffer a correction. Markets never rise without interruption. If the next correction happens to be more severe than normal, the folks in Washington will want to place blame. That's when Wall Street and the mu and May 22 for special attention.

As I've told my readers numerous times over the years, stock prices almost always rise the week that options and futures contracts expire. And there isn't any mystery as to why. Professional traders who own these contracts don't want to lose money. So they purposely push the stock market higher during the week these financial instruments expire. Everyone shrugs and says "so what" because the stock market has been climbing.

If the pros push prices higher, a lot of amateur investors make out as well. On May 19, the Dow Jones industrial average rose nearly 56 points after being down more than two dozen that day. A Wall Street firm, which I won't name, is recommending that clients keep 90 percent of their money in the stock market. But listen to what one executive of i that firm has to say. "Deep down, the portfolio managers are intensely worried that the market has misread President Bill Clinton's program.

And that the market stands on very fragile legs. And if any one was knocked out you could see a debacle." Remember, that firm one of the largest on Wall Street has $9 out of every $10 of its investors' money in the stock market And it thinks there could be a "debacle." People on Wall Street don't always speak with utter frankness when they know they are being quoted by name. I've had people confide their deepest fears to me about, say, stock prices collapsing within a week or the U.S. economy going into a depression, only to beg me not to use the quotes. "It will make me look foolish," they'll say.

Or, "My company will kill me." This week I wanted my readers to hear some of the fears being expressed on Wall Street, where stock prices have been climbing for years for essentially no reason other than because there is no better place for small investors to put their money. I told my sources that they would not be quoted by name or any identifying reference. In return, I asked them to speak as openly as possible about the stock market, the state of financial affairs in this country and anything else they wanted to get off their chests. All the people I telephoned are long-time experts on the stock market No young hotshots looking to make a name for themselves. They advise some of America's richest people.

These are all rational people who, if named, would be taken seriously by their colleagues. "I don't think I'm overstating this concern," says my source at the Wall Street firm mentioned above. "We talk about it weekly. We're telling our clients we are concerned. But the concern we are expressing is less than reality." The erratic behavior of the stock the Clinton administration doesn't show some leadership in getting a viable economic plan passed.

If Clinton is unsuccessful, the financial markets could get very riled, this Washington-based source believes. "If not, he'll be on a three-year downhill run which could carry the economy and the financial markets with him. I think they could plunge." And more: "I think we are in the final stages of a bull market. We are shifting from a bull to bear market By any measures, stocks are vastly overpriced," says another oft-quoted Wall Street expert The only thing keeping stock prices up is the fact that "people are desperate," he said. This guy thinks the Dow Jones industrial average could fall to 2,800, "which means a lot of individual stocks would be down 40 percent to SO percent" And, if the U.S.

economy goes back into an official recession, then stocks would fall even further. "There is no upside," says this source. Here's one more quote, from a guy who's been on Wall Street for decades. "Near-term I think the stock market will hang around current levels maybe for two or three weeks or so. Then I think we are going to get a good-sized correction.

After this correction you get another rally," he says, which lasts until the fall. "Then we get the big one. We are going to go into a recession in 1994 and the stock market will start to discount it later this year," he adds. How far down will the market go? "I think we cut it in half in two to three years," he says. You won't see any of these people allowing these thoughts to be attached to their names.

But, take my word for it, they are genuinely scared. If you are investing in the stock market, I thought you might like to hear what people on Wall Street are saying behind your back. COOL IT: It ought to be investigated. Nobody's saying that now. But when stock prices finally decline which, of course, they always do the folks in Washington will start pointing to weeks like the one between May 17 AUTOMOBILE MANUFACTURERS INCENTIVES Manufacturer Rebates CHRYSLER MOTORS (1992-93 models Chrysler1 $1,000 Dodge Cars1 2 $500 Dodge Trucks' $500 Minivans $500 Eagle $500 Jeep3 $500 Plymouth $500 and bond markets over the past few weeks seems to have caused the uneasiness on Wall Street to grow.

Interest rates are rising one minute and, mysteriously, declining the next. Program trading pushes stock prices sharply higher one day. But they come down sharply the next day. In this whirl of confusion in which markets behave as they shouldn't many experts are privately expressing a lot more fear than they are publicly. Making the experts even more shy is that stock prices have been confounding them for years.

Because interest rates are dropping, stocks have been ignoring traditional excuses for rising and falling. Corporate profits no longer seem important as long as small investors have no option but to put their money in the stock market. And because stocks have been puzzling so many people for so long, experts often are afraid to speak their minds when it comes to nay-saying the market So here goes. The stock market, says another source who closely follows Wall Street, "is grossly overvalued and discounting several years of this piddly economic growth. "As far as the stock market is concerned, I think it's headed for a major bear market.

When will it start? Who the hell knows," he says. "I would be surprised if it goes past mid-year." Another long-time stock market watcher is publicly expressing a little concern about equities. What he won't say on the record is that he thinks stock prices will lose 50 percent of their value before the coming decline ends. "The stock market is way overpriced," he says. "I think the Clinton administration is on a track that is going to end up no good for the country.

The country was in trouble economically to start with." Another source believes the critical time will come later this summer if Including salads' don't," he said by cautious about new move too quickly The company, time, has tested only to return those tinkering. "We are pleased satisfied," said combined today, we know we Meanwhile, anti-beef protesters for a vegetarian The Beyond Beef saying the the alternative budget promoting Rensi said the burger and said Rebates on 1992-93 Ham pickups (gas), LeBaron coupes, Dynasty, Daytona, Cherokee and Ram wagon vans expire Sept 30. 2,000 rebate on 1992-93 Shadow and LeBaron convertible. FORD MOTOR CO. (1992-93 models) Ford cars3 6.9 6.9 6.9 Sept.

22 Aerostar vans $750 tual fund industry will wish it hadn't done what it did last week or the options expiration week before that or before that, or John Cnidele is a financial columnist with the New York Post His mailing address is P.O. Box 610, Lincroft, N.J. 07738. Loan Terms (Mos.) 24 36 48 60 Exp. Date $1,500 2.9 4.9 5.9 6.9 June 30 $1,000 2.9 4.9 5.9 6.9 June 30 $2,000 2.9 4.9 5.9 6.9 June 30 $1,000 5.9 6.9 7.9 8.9 June 15 $1,500 2.9 4.9 5.9 6.9 June 30 $1,500 2.9 4.9 5.9 6.9 June 30 $1,500 2.9 4.9 5.9 6.9 June 30 6.9 6.9 6.9 Sept.

22 $2,000 6.9 6.9 6.9 Sept. 22 $1,500 6.9 6.9 6.9 Sept. 22 $3,000 Sept. 22 Grand Marquis. on Capri.

'No low finance rates $1,500 5.9 5.9 5.9 Sept. 22 A $1,500 5.9 5.9 5.9 Sept. 22 $1,000 5.9 5.9 5.9 Sept. 22 $1,500 5.9 5.9 5.9 Sept. 22 $1,000 5.9 5.9 5.9 Sept.

22 $1,400 July 2 $2,000 July 2 $1,000 July 2 July 2 lor Excel, Scoupe and Elantra GL models. $1,800 July 6 $2,000 July 6 July 6 Post-Dispatch chart Trucks $500 Mercury3 $200 Lincoln5 $1,000 '39 finance rate on Crown Victoria and on Lincoln models. GENERAL MOTORS (1993 models) Buick6 $250 ChevroletGeo7 $500 ChevyGMC trucks10 $500 Oldsmobile8 $500 Pontiac9 $400 McDonald's Tries McStuffins, Chicken 3.9 for up to 43 months, and 5.9 tor 60 months on Skylark models. 7 No rebate on Camaro or Geo Prim; 2.9 for 43 months on Geo Storm or Tracker. Based on option package.

over 48 months on Grand Am and Bonneville, $.9 for three-year financing on Sunbird, Grand Prix and Trans Sport; no incentives on Firebird or Lemans. No rebate on full size pickups; 1992 incentives on Safari and G- Vans end July 25. HYUNDAI (1992-93 models) Excel $850 Sonata $1,000 Scoupe $400 Elantra $1,200 telephone. "McDonald's is usually very items, so I wouldn't expect them to unless they come up with a sure winner." in a bid to increase sales mostly at dinner pizza, pasta and various chicken dishes, products to test kitchens for further with our momentum, but we are not Mike Quinlan, chief executive for McDonald's operations. "No matter how good we are can be better tomorrow." before the shareholders' meeting, about 30 greeted shareholders with signs calling hamburger.

Campaign has targeted McDonald's Oak Brook, chain should offer burger and spend 25 percent of its advertising it company has no plans to offer such a the company has other vegetarian fare, OAK BROOK, 111. (AP) French bread and fried chicken are finding their way into some McDonald's restaurants in the chain's quest to provide more for its customers and snare a larger share of the fast-food market. McStuffins, french bread sandwiches with a sauce baked in the middle, is being tested at restaurants in the Raleigh, N.C., area; Erie, and parts of Texas, Ed Rensi, president and chief executive of McDonald's domestic operations, said at the company's annual meeting last week. The sandwich, which sells for about $2, can be ordered with teriyaki chicken, barbecued beef, pepperoni pizza and cheesesteak flavorings. And the company, buoyed by strong sales of its Mighty Wings fried chicken promotion, is testing other fried chicken products at restaurants in New York City, Cleveland and Norfolk, Rensi said.

He said it is too early to say whether the products will be expanded into other markets. Analyst Peter Oakes of Merrill Lynch Inc. in New York said reviews so far of McStuffins have been good. "But you've got to realize that for everything that you and I hear about, there's probably five other things we First time buyers program includes (500 rebate MAZDA (1992-93 models) Protege11 $1,250 MPV Minivan $1,500 Trucks $1,200 "Plus free air conditioning or auto transmission. Finance rates and rebates subject to change without notice.

In most cases, customers receive either the rebate or special finance rates, but not both. Most manufacturers have similar incentive programs where dealers still have older models in stock. SOURCE: Auto manufacturers l..