From a TV Interview with David Kostin, Chief US Equity Strategist, Goldman Sachs, Tuesday Morning, March 11, 2002

The Bull market is coming to an End

A mid-year slump is coming --- down about another 15% from here (we are down 15% now, so that is calling for a decline of about 30% overall).

Currently, a) the consumer is pulling back – avoiding travel, avoiding going out in public, avoiding meetings, etc.; b) lower oil prices are leading to lower oil company earnings; c) bank earnings are on a downtrend due to lower interest rates; and d) the technology sector is guiding earnings down. (So, this is the Goldman Sachs case for lower S&P 500 earnings, lower stock prices, and is what will bring the bull market to an end.)

Goldman Sachs' estimate of S&P earnings has been lowered from $174.00 to $165.00 a few weeks ago to $157.00 today, about a 5% decline today, or 10% overall.

By quarters,

· second quarter earnings down about 15%, analysts expect up 3%

· third quarter earnings down 12%, analysts expecting earnings up 8%

· leads us to a 2450 S&P 500 target market-price

· bull market will end soon

· it’s rare that the market moves up when earnings estimates are moving down

· so, there is a wave of negative earnings revisions to come

· revenues coming down, too

· things are deteriorating pretty rapidly right now

· fourth quarter will probably get better

· earnings typically fall by a median of 13% in the average bear market

· full recovery by next year 2021, predicting11% recovery next year