Economists Kaufman and Sinai Will Give Up Posts
Henry Kaufman and Allen Sinai, two of Wall Street’s best-known economists and market gurus, are giving up their current posts at major investment firms.
Salomon Bros. announced Wednesday that Kaufman, whose gloomy forecasts in the early 1980s earned him the nickname “Dr. Doom,” would leave early next year to form his own consulting firm.
Kaufman is currently a managing director, senior economist and head of research at Salomon Bros.
Sources said, meanwhile, that Sinai was dropping the job of chief economist at Shearson Lehman Bros. but planned to remain with the firm in a more “entrepreneurial” capacity outside the company’s New York headquarters.
Kaufman, 60, is believed to be the best paid economist in the financial district. In 1984, his salary and bonuses were estimated to total about $2 million.
His economic prognostications were often forceful market movers several years ago, but have had a lessening effect recently.
For example, when Kaufman predicted on Aug. 17, 1982, that interest rates would drop sharply over the next 12 months, the Dow Jones index of 30 industrials shot up 38.81 points in what was then the biggest one-day point gain ever.
He also has had notable lapses. His December, 1980, forecast failed to foresee that the prime lending rate would rise above its record 21.5% level.
Salomon spokesman Robert S. Salomon Jr. said Kaufman’s effect today is “certainly less than it was in 1982.”
“From time to time, markets and investors have hung on his every word,” Salomon said. “The peak, in terms of his impact, was most probably in 1982.”
Indeed, the markets ignored Kaufman’s 1988 forecast, delivered last week, that the “element of crisis that pervaded world financial markets in October, 1987, threatens to re-emerge in the coming year.”
Friction between Kaufman and Salomon Bros. management is believed to have existed for several years. Kaufman reportedly objected to the firm’s increased role in the “junk bond” market.
Kaufman resigned as a vice chairman in October, 1986, in a move Salomon executives said was intended to allow a number of younger managers to play a more prominent role in the investment firm.
Sinai, 48, gained increasing prominence during the October stock market crash. He has been widely quoted and has made numerous television appearances during which he interpreted the course of events.
Sinai’s job change comes amid the onset of layoffs at E. F. Hutton, which is being acquired by Shearson.
Sinai will be succeeded by Hutton economist Robert Barbera in a move that was intended to send positive signals to Hutton’s battered work force, sources said.
