Now, investors get to hear from Yardeni by fax, phone

October 09, 1991|By Thomas Easton | Thomas Easton,New York Bureau of The Sun

NEW YORK -- The weekend is over and you've watched the talk shows, read the Saturday investment magazines and digested several morning newspapers. Need to hear more about the shape of things to come?

On Monday, Edward Yardeni, the oft-quoted economist for the Wall Street brokerage C. J. Lawrence, began a new Ecophone/Ecofax service. Customers -- mostly major investors -- get a fax with a "discussion chart" at 9:30 a.m., and an hour later, via a Missouri telephone relay station from Mr. Yardeni's New York office, they tune in for a group discussion.

That bypasses the word of mouth from thinker to broker to customer that for decades has been common among major investment firms.

And it is days removed from the still common distribution system for written reports -- stick 'em in the mail and hope the world hasn't changed by the time the paperwork arrives.

What did these presumably sophisticated people care to discuss first thing Monday morning? The continuing credit crunch, impact of changes in government spending in the wake of defense cuts, direction of the dollar and the potential for renewed contraction in the economy -- in short, the usual rumblings for investors and economists that has been under discussion for months.

Mr. Yardeni, an avowed optimist, has had a rough year, witnessing a recession he believed would never emerge and now confronting bleak results for corporate profits, employment and lending he believed could be avoided.

"I still believe in the slow-go recovery," he said, but "we're getting pretty close to show-time."

With interest rates down considerably over the past year, Mr. Yardeni thinks the recovery may soon begin taking shape, but he urged clients to check commodity prices.

The benchmark Commodities Research Bureau Index, often viewed as an indicator of the economy's underlying strength, has declined about 20 percent since early 1989.

"It looks like its bottoming out," said Mr. Yardeni, but "I would be very concerned about a double dip [back into recession] . . . if they went down."

But Mr. Yardeni is always quick to point out news contrary to his basic line of reasoning, and the first-ever discussion chart supplied to investors reflected the precipitous drop over the past year in financial assets held by banks and thrifts.

"It certainly looks like a nasty, ugly credit crunch," he said, noting that the demise of thrifts and unwillingness (or inability) of banks to replace them has resulted in a dramatic collapse in lending since 1988.

But a second graph notes that non-financial debt continues to expand, albeit at a reduced pace than in the mid-'80s, suggesting that other sources, such as the bond market and finance companies, are providing funds.

During the recovery, he expects much of the economy to be self-financing. He thinks a leap in productivity will cause profits to soar in the fourth quarter and the stock market to "rock and roll."

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