Prospects for peace in the Middle East...
Prospects for peace in the Middle East caused the Dow Jones Industrial Average to gain 96.5 points, or nearly 4%, over the past two trading days, according to Irving Katz, director of research for Thomas Green/San Diego Securities. The true impact of current events on the nation’s economy is now becoming more apparent, Katz said. “We are in, or are heading into, a recession, which can now be talked about since the election is over,” Katz said.
The recession is being exacerbated by a loss of consumer confidence, high interest rates, devaluation of real estate, restrictive bank lending practices, the growing cost of the savings-and-loan bailout and the costs associated with the military buildup in the Middle East, Katz said. All of that activity should eventually cause the Federal Reserve Bank to lower interest rates, Katz said.
Utility stocks, which offer a safe haven for depositors who fear a recession, are moving up in price, Katz said. San Diego Gas & Electric gained $1.50, to $46, after making a new, all-time high of $46.125. At this price, its $2.70 annual dividend is returning 5.8% to shareholders. Southern California Edison Corp., SDG&E;’s prospective merger partner, is selling a point off of its all-time high. SDG&E; shareholders are to receive 1.3 shares of Southern California Edison for each of their shares if the proposed merger is completed.
The best gain among local companies was made by Price Co., which gained $2.75 during the past week and $3 during the previous week. That move might be attributed to recent acquisitions of the Wholesale Club by Walmart and the Warehouse Club by the Great Atlantic & Pacific Tea Co.
Some depressed San Diego stocks managed good gains last week. Medical Imaging Centers of America gained $1.50, and Mycogen gained $1.25. Cubic, Alliance Pharmaceuticals and Mail Boxes Etc. each gained $1.
On the down side was PS Group, which recorded a new 1990 low of $30 despite recent reports that Warren Buffett of Berkshire Hathaway is continuing to increase his stake. Buffett’s last investment, which raised his ownership to 22.3%, was made at $33 a share.
