Making Sense Of Washington

April 06, 1993|By Ian Johnson | Ian Johnson,Staff Writer

WASHINGTON -- Don't call Les Alperstein a Clinton fan, but the veteran Washington-watcher is as tickled by the new administration as any Democrat on Capitol Hill.

"This is fantastic. This is made in heaven," Mr. Alperstein said of post-election Washington.

The 50-year-old Baltimore native has good reason to be happy with the election's outcome. Although a self-professed political independent, Mr. Alperstein's job as head of Natwest Washington Analysis is to decipher Washington's ways for Wall Street's fickle readers. And although skeptical of the new president, Mr. Alperstein knows that political change means the financial community is depending on his service for guidance in the months ahead.

One of the most surprising aspects of Mr. Alperstein's career is how few others do it. While Wall Street spends hundreds of millionson analysts who study everything from the latest carbonated beverage to nuclear submarines, it only employs a handful to cover the government of the world's most powerful country.

"I think it's just a lack of imagination on the part of Wall Street. Someone on the Street has lunch with Dan Rostenkowski and they think they know Washington," said Mark Melcher, who oversees Prudential-Bache Securities Inc.'s staff of Washington analysts. Representative Rostenkowsi is a Democrat from Illinois and head of the powerful House Ways and Means Committee.

Up until 1975, when a new law slashed brokerage profits by ending fixed commissions on stock sales, more than a dozen brokerages had Washington bureaus that helped Wall Street strategists figure out how government policy shifts would affect stocks in certain industries.

After 1975, however, that number was cut and today there are only four groups of analysts, two of which are U.S.-owned. Mr. Alperstein's Washington Analysis is owned by British-based Natwest Securities and rival Washington Forum is owned by the French bank Credit Lyonnais. The other two groups of analysts work for two U.S. brokerages, Lehman Brothers Inc. and Mr. Melcher's Prudential-Bache.

According to Lehman's Thomas Gallagher, the Washington job is sometimes lonely. Not only do Street people feel they know it all, but they are often suspicious of those who live and thrive inside the Beltway.

"When I predicted that Bush would win in 1988, no one said I was a Republican. But when I predicted that Clinton would win, everyone said I was a Democrat," mused Mr. Gallagher, who then confessed that he was indeed a Democrat, having served on the staff of Sen. George J. Mitchell of Maine, the Senate majority leader.

The analysts usually make their views known through daily telephone and fax communication with their company or clients and weekly or biweekly newsletters.

Like Mr. Gallagher, Mr. Melcher contributes to his brokerage's weekly strategy booklet. He also consults with portfolio strategists to help them figure out which stocks will be helped or hurt by government policies.

If the Washington analysts have one underlying view of the Clinton administration, it is caution. Unlike many who trade on markets, they warn against embracing the latest government pronouncement as a fait accompli. Often proposed new policies are thwarted by the division of powers and political pressures.

The most recent example is health care reform, which all four analysts said probably would not be passed this year. While Wall Street continued until recently to trade health care stocks as though the administration's concept of managed care would be in place this spring, the analysts warned long ago that the budget and deficit-reduction would take priority.

"I had a guy who told me it wouldn't happen this year. I said, 'No kidding, I said that last year,' " Mr. Melcher said.

Besides health care, the analysts are closely watching the budget debates and President Clinton's stimulus package. Mr. Alperstein cautioned that a final deficit deal will be months away.

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