The Michigan Daily - Tuesday, October 28, 1997
Bull market's
future is unclear,
analysts say

NATION/WORLD

AROUND THE NATION
Human rights agreement not expected
WASHINGTON - President Clinton's meeting with Chinese President Jiang
Zemin this week is likely to produce agreements on Chinese arms sales and other
important issues - but not on human rights, U.S. officials concluded yesterday.
In months of negotiations preparing for Jiang's arrival in Washington tonight,
Clinton administration officials quietly urged China to take some visible steps
toward defusing the human rights issue, a sore point in U.S.-China relations sir
the 1989 Tiananmen Square massacre.
U.S. aides particularly hoped that Jiang might order the release of China's two
most prominent imprisoned dissidents, democracy advocate Wei Jingsheng and
student leader Wang Dan.
But as the meeting approached, it became clear that Beijing would not free the two
prisoners in advance and that a grand gesture during the sessions also was unlikely.
"It's almost harder to do it' while Jiang is here because China wants to avoid
appearing to bend under US. pressure, a White House official said. "Whatever
they do, they will do by their own lights."
Clinton still hopes that the two dissidents will be released before he makes a planned
visit to China in 1998, officials said. But Clinton will not make their freedom a co
tion for his trip, because that would make the larger U.S.-China relationship "host
to their cases.

The Washington Post
Despite the closing of the New York
tock Exchange yesterday because of a
iarket drop for the first time since
929, professional investors, traders
nd.analysts said it remained unclear
ihether the great bull market that
vegan in August 1982 is over.
Much of the remarkable climb in
:ock values over the last 15 years has
een propelled by individuals who had
ot owned stocks before, but who have
ivested in the markets through retire-
tent plans and mutual funds.
If those small investors are scared
way by yesterday's stomach-churning
ee-fall, some experts said, then the
nd of the bull market is in sight.
"On Wall Street, there was panic
day," said Jean-Marie Evaillard, port-
: lio manager of Sogen International, a
Jobal mutual fund based in New York.
The big question is whether it reaches
iezld lady in Des Moines."
But other market observers said the
f ar y may not yet be over. They argued
iat the drop in stock values may be
j othing more than a long-anticipated
correction" from unrealistic highs.
Optimists also note that the U.S.
conomy remains healthy overall, and
-ey point to indications that small
wvestors did not flee yesterday.
"The market has been in a correction
phase for three weeks," said Alfred
3oldman, director of market analysis at
A.G. Edwards & Sons Inc. in St. Louis.

Goldman does not think recent
events mark the end of the bull market.
"No question, there are problems. But
we feel the market has substantially
overreacted and that it is creating buy-
ing opportunities," he said.
The fate of the bull market, some
said, will be determined by how small
investors react in coming days.
"Today was definitely a dent in market
psychology," said Jay Finkle, chief stock
trader for Loews Corp., a New York insur-
ance, hotel and cigarette conglomerate
that invests in the financial markets. "We
are at a critical stage. We will have to see
how stocks trade overnight.'
More pessimistic was Mark
Holowesko, chief investment officer for
Templeton Worldwide. "I think the
panic will spread to the retail investor,
he said. "The fact that the market closed
is very bad for the small investor.
People have perceived the U.S. market
as a safe place to invest. This has shat-
tered the illusion."
But others said that yesterday's
events probably did not signal the end,
and some mutual fund managers report-
ed that as many individual investors
were buying as were selling stocks.
"This was a long-overdue correction
in a market that was too high, not the
beginning of a bear market," said
Michael Steinhardt, a recently retired
stock market speculator. "In my life-
time, there has not been a serious
decline without higher interest rates,


AP PHOTO
Traders react to the record-low Dow numbers minutes before trading was halted
on the floor of the New York Stock Exchange yesterday.

and I do not foresee that. The economy
is fundamentally in balance."
Stephen Leeb, author and newsletter
publisher, agreed and said, "Bull mar-
kets don't end with interest rates falling
and the economy growing, which we
have now. There's no case of that, going
back to 1929."
"We are in the midst of a Pacific Rim
crisis, which in the past has been good
for U.S. financial markets," said Nancy
Lazar, an economist at International
Strategy & Investment, a money man-
agement firm in New York, referring to
the economic turmoil in Asia that has
shaken financial markets worldwide.
If stocks are to rally as they have in
past years of the bull advance, new
money must flow into the market. There

were conflicting signs yesterday about
the outlook for new inflows.
"Money has not been flowing in
quickly enough to sop up the huge surge
in new stock offerings" said Charles
Biderman, head of Market Trim Tabs, a
firm that tracks the flow of money in and
out of the market. He also noted that cor-
porate insiders have been selling
unprecedented amounts of their own
shares in publicly traded companies.
Loews trader Jay Finkle said, "You
break the back of a bull market when
you see money flow out. One worri-
some sign to me is that most of the big
blocks of stock I saw offered for sale
came at the end of the day. That could
signal sales from mutual funds in
advance of expected redemptions.'

Fee
e l defit drops
to $22.6 billion
WASHINGTON - The federal
budget deficit for the 1997 fiscal
year fell to $22.6, billion, a level
lower than any other major industri-
alized country, President Clinton
announced yesterday.
The drop reflects a $267 billion
decrease since he took office and
enacted a balanced-budget plan over
objections of Republicans, Clinton said
during a speech to the Democratic
Leadership Council.
"The deficit-reduction .plan of
1993 was supported only by
Democrats, enacted in the face of
the most withering partisan criti-
cism and deep political risk that cost
some members their positions in
Congress," said Clinton, fighting a
hoarse voice.
"Well, it's time for the naysayers
to admit they're wrong. It worked.
And America is better for it."
Administration officials credited
the drop to strong economic growth

and a resulting increase in tax rev-
enue.
The deficit was reduced even before
the White House and Congress reached
a balanced-budget agreement during
the summer, but the final figure was
even lower than administration o
cials had predicted.
HIV outbreak M
N.. ied to dealer
WASHINGTON - At least nine
females in a semi-rural area of west-
ern New York state, including one as
young as 13, have been infected with
the virus that causes AIDS by a 20-
year-old man who sold drugs 9
schoolgirls in exchange for sex even
though he knew he had the disease,
officials said yesterday.
"He liked to lurk around the edges of
schools or parks, maybe where kids
would be playing basketball, and pick
out young ladies who may, for one rea-
son or another, be in a risk-taking
mode" Chautauqua County Health
Commissioner Richard Berke said.
 .. ... k

ANALYSIS
'coitInued from Page 1
;igts of white students, advocates say affirmative action cor-
jects past wrong-doings to minorities.
The Census Bureau reports that in 1996, 7.5 percent of
Hispanic Americans attained a bachelors degree while 16.9
petent of the general population earned a bachelors.
Census reports also show economic inequality between the
-aces as well. For example, 26 percent of black families live
oelbw the poverty line, while overall, 13.7 percent of families
arcin poverty.
But many affirmative action opponents argue that race-based
:references do not help create racial equality, instead preventing
women and minorities from truly feeling they have accomplished
something.
"Without affirmative action, minorities and women will
know that they received admission to U of M because of what
they can offer the University, not because of their skin tone or
genitalia," said LSA junior Greg Hillison.
Others who oppose affirmative action say that it ultimate-
ly discriminates against white males.
Frederick Lynch, author of a book criticizing the University's
affirmative action practices, found data that indicate minorities
receive preferential treatment in financial aid at the University as
i result of the Michigan Mandate. Eighty percent of the
University's merit scholarship funding and 42 to 50 percent of gift
aid goes to underrepresented minorities at the University.
Lynch said the University's affirmative action programs do
not necessarily create diversity because they attract upper-
iniddle class blacks.
But, many advocates of the University's current admissions
policies say that there are not many upper-middle class black
students in the Metro Detroit area because of great economic
inequality. According to the 1990 Census, .5 percent of black
families in Metro Detroit earned more than $100,000, while
2.2 percent of white families in the area earned more than
$100,000.
"I feel that given the makeup of society, in the future we need
to make sure there are opportunities for all people to get an edu-
cation," said SNRE Prof. Bunyan Bryant.
Regardless of any moral theory on the need for affirmative
action, the court will rule on the case based on the legality of
the- University's practices in admitting students to LSA.
The lawsuit contends that because race is a factor in admis-
$ions, the University violated the plaintiffs' 14th Amendment
rights as well as the protection granted to them under the


m

"This will be the great baftle RALLY

to eliminate affirmative
action nationwide"
- David Jaye
State Rep. (R-Macomb)

Continued from Page 1

Civil Rights Act of 1964.
Title IV of the Civil Rights Act states that "No person in
the United States shall, on the ground of race, color, or
national origin, be excluded from participation in, be
denied the benefits of, or be subjected to discrimination
under any program or activity receiving Federal financial
assistance."
The courts will have to decide if the University, which is a
federally funded public institution, excluded Gratz and
Hamacher from the University because of their race or if they
were denied admission for factors other than race.
There is no Supreme Court precedent regarding affirmative
action in higher education. The most recent case in that area was
the 1978 ruling in Bakke vs. California.
In the Bakke case, the court was split in the decision. Four
justices voted in favor of race as a factor, four voted against
affirmative action, and Justice Lewis Powell delivered his own
opinion as a compromise between the two sides. Powell's opin-
ion has been interpreted as the court's decision, but it does not
have any legal validity since it is only the opinion of one justice,
not the whole court.
Powell wrote that racial quotas are illegal, but race may be
used as one of many factors by a university or college in order
to achieve diversity.
If the University's case is appealed to the U.S. 6th Circuit
Court in Cincinatti, and then to the Supreme Court, it could
set a precedent regarding affirmative action in higher educa-
tion.
When the courts examine the lawsuit, they will have to
decide if the Michigan Mandate is simply a successful effort
to increase diversity or if it is a method that systematically
discriminates against whites and violated the rights of Gratz
and Hamacher.
On a larger scale, the lawsuit could ultimately force the
courts to rule on the constitutionality of minority prefer-
ences in higher education, and that ruling would forever
associate the University's name with either the abolition or
upholding of affirmative action.

have been given a sight into the future.
We know what will happen if we lose
this case.
"We are affirmative action's single
hope in the country. The losing of affir-
mative action will resegregate the
University, the country, not only in
higher education but in all aspects of
life."
The rally also gave students a chance
to give personal statements of how
affirmative action had affected their
lives.
Law second-year student Kevin
Pimentel was one of the students
who expressed his support for affir-
mative action near the end of the
rally.
"Since a lot of people of color are
denied these opportunities from the
very beginning, they don't really have
these opportunities for the rest of
their lives," Pimentel said.
"Affirmative action creates these
opportunities, which is why we must
defend it."
LSA senior Jennifer Polan
attended the rally to actively partic-
ipate in defending affirmative
action.
"I want to support affirmative
action," Polan said. "I really think we're
in danger of losing it. It's a step toward
helping to get rid of the inequalities
that exist."
NEW?
CALL 76-
DAILY.

. ARoUND THE WORLI

Bill would give
power to some Jews
JERUSALEM - A contingent of
Reform and Conservative Jews, mostly
from the United States, lobbied the
Knesset yesterday against legislation
that would deny them legal recognition
in Israel. A top government official
accused them of trying to bring down
the government.
With support from Prime Minister
Benjamin Netanyahu, Israel's legisla-
ture is preparing to pass a bill that will
give Orthodox Jews a monopoly on
religious matters in Israel.
The issue is political dynamite in
Israel and has put Netanyahu's govern-
ment on a collision course with
American Jewry, which is dominated by
Reform and Conservative movements.
American Jews are among the most gen-
erous donors to Israel and provicrucial
political backing in Washington.
"I'm a second-class Jew in the
Jewish state," Rabbi Gerald Weider of
New York City said as he and some 20
other Reform leaders wandered the
Knesset halls, lobbying against a plan
Fd[1 M 1 it

that effectively denies the non-
Orthodox a place on councils that over-
see religious services.
The legislation is to be presented
today by religious parties
Netanyahu's coalition government.
Another bill opposed by Reform Jews,
making non-Orthodox conversions ille-
gitimate, is pending.
Many vote for peace
despite boycott
BOGOTA, Colombia- While a guer-
rilla-imposed election boycott kept m
from the polls in rural areas, election offi-
cials said yesterday that city dwellers had
voted for a peace referendum to end the
nations's four-decade-long civil war.
Half the country's registered voters ---
or 10 million people - cast ballots for
peace in local elections Sunday, accord-
ing to results released yesterday. And the
result has encouraged local leaders to
pursue their own talks with the rebels,
filling the gap left by the federal gove'
ment's inability to begin negotiations.
- Compiledfrom Daily wire reports.
-I-1Ti~




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