This new product was very quickly adopted

When the US economy has a point aside, that is the stock market in New York: it slowing No, it starts again. This was in essence the message of our last circle of the managers of the year. He could give a sense of paradox. Our four guests, from especially transatlantic, explained willingly. First, the threat of recession is ousted. It should be talk of a soft landing. Then the shares remain cheap. As corporate profits have never been also thriving. Professional investors are so replete with investment ideas. For the readers of "les echos""weekend", they have delivered a choice of their preferred values. Their opinions are valuable because all four belong to the caste of the Wall Street gurus. It was great obligations specialist Paul McCulley (from Pimco), William h. "Bill" Miller (from Legg Mason Capital Management), "the man, since 1998, beating up systematically the S & P 500," of Alexander Farman-Farmaian, just take the Vice-Presidency Edgewood Management LLC, and Harry Segalas, Director of the strategy of investment in WP Stewart.

With all the alarmist messages stagnation in real estate, slow growth United States, we look forward to your feelings about the prospects for the economy of your country in 2007.

PAUL McCULLEY. The consensus of the time, shared by the US Federal Reserve, is a landing soft, comparable to that observed in 1995. We had lived then in 1994 tightening, followed by a slowdown in the economy, before moving on to a cycle of relaxation for three to four additional years. Historically, the situation therefore appears to be similar to that of the landing smoothly from 1994-1995.

At the present time, the growth is below its potential, mainly because of the downturn in the housing sector. Because there is not question of landing soft but of recession. Housing starts and construction of new housing are massively, retreating while the surplus of available housing is considerable. This situation should continue in the coming quarters. We also probably will see some major signs of fatigue in the market of individual houses built, which will have a negative impact on the purchasing power of households. It is therefore clear that the economy is facing some important headwinds from the housing sector.

Nevertheless, there is no reason to seriously consider the possibility of a recession. And this for two fundamental reasons. First of all, companies are in excellent financial health. Following the debacle of 2001 and 2002, they have adjusted their balance sheets in a spectacular manner. Expressed as a percentage of GDP, the accumulation of the profits of the business is at its highest level for fifty years. Cash flows are abundant. The business sector remains a bastion of strength, in the face of households, which expected difficulties. In addition, the Federal Reserve has considerable latitude to relax monetary policy. In fact, we believe that it will be a relaxation of monetary policy in a measure consistent with the expectations of the bond market.

ALEXANDER FARMAN-FARMAIAN. I agree with this soft landing scenario. Identical situations of 1985 and 1995 has been very positive for the holders of shares. The scenario we are considering is therefore positive for stocks in General, and I am rather optimistic in the light of the prospects of a soft landing that we sense.

I am even convinced that it will happen much faster than expected. Thanksgiving retail sales are up by 6. Over a period of four days, they have even experienced an increase of 19 over the same period of last year, which is a unique movement in this area. The number of buyers was falling, but purchase volumes were higher, thus advancing the average basket by consumer. The decline in the number of buyers could be linked to the development of the use of the gift in the United States, which extends the purchases at the time of year before and after Christmas holidays. Overall, these data are characteristics of a strong economy with a stronger consumer, with a low unemployment rate and a higher level of real wages due to the decline in inflation. Over the past two months, the (ICC) consumer price index experienced its largest fall since 1948. These various elements suggest a very good next year for the shares.

WILLIAM H. MILLER. For two years, the consumer prices are compressed, because of the tightening of the monetary policy of the Federal Reserve. Since 8 August, date of the suspension of this strength by the Federal Reserve, the market has gained almost 10. In 1995, in the twelve months following the interruption of the tightening of the policy of the Federal Reserve, the market grew by 39. Reported at an annual rate, we record therefore currently an increase in almost identical to that of this period.

We can consider a significant growth of indicators in 2007, and I do not think that we have to fear a possible recession. We have known that 14 months of recession over the past 25 years, so I do not think that concern is justified.

HARRY SEGALAS. In the 1990s, there was an expansion both of the PER and the profits and the & S P 500 appreciated 18.2 per year on average. Since 2000, the situation has become much more difficult with an average annual growth of 2.3 market. Therefore, we have moved from a favourable period of expansion at a time of multiple compression. De facto, the key to success is now to focus on a stable flow of beneficiary growth.

What is in the mid-term elections that take place have an impact on us financial markets over the next two years

PAUL McCULLEY. If it is accepted that they were a referendum on the war in Iraq, they could have an impact on the behavior of the Bush administration. They would thus have macroeconomic consequences, particularly in terms of the premiums for risk for actions and for petroleum products. In the end, the mid-term elections should not have a significant market impact, unless they result in a net change in foreign policy of the United States.

On the contrary, the markets and particular actions, but also that of corporate bonds market have already started to anticipate the major sectoral transformations in the event of a return to power of the Democrats. This is particularly visible in pharmaceutical and health care sectors. Also are the elections important at the sectoral level.

ALEXANDER FARMAN-FARMAIAN. They will also have implications for energy and defence sectors!

WILLIAM H. MILLER. In the United States, the faithful of the political parties have positions much more ideological that is the case within parties or for the

on the whole American people. This is why anyone who relies on the words of the representatives of the parties to get an idea of what the future can only have a distorted image. No substantive legislation can be adopted without a broad bipartisan support. For example, Democrats are planning to give the Government the power to negotiate rates of care in the field of health, but this reform is totally unlikely without bipartisan support. This is why I am convinced that we are going to endure two additional years of inertia to the 2008 elections.

ALEXANDER FARMAN-FARMAIAN. In reality, these last two years were a historical anomaly, with the same majority in the Senate and the House of representatives. However, inertia is in itself quite negative for shares in all, and it helps reduce the risk of adverse action.

HARRY SEGALAS. This may even create opportunities in certain sectors and certain securities. Some of epidermal reactions in the health care sector, for example, have opened opportunities and allowed us to increase our positions on certain companies such as Wyeth or Walgreen. We strive to operate this epidermal reaction to the elections that we likely and what we consider as opportunities.

What values or asset classes use you for 2007

HARRY SEGALAS. The Disney action is for us a safe value. Half of the activity is now centred on the network for cable television (ESPN). This network includes several signs, numerous channels and generates two sources of revenue: advertising and revenues related to the Internet. Mark Disney itself remains very strong. Change of operation of the direction, with the arrival of Bob Iger at the head of the group, gave a new breath to the brand. Significant changes are also noted in the Board of Directors, with the arrival of John Pepper (who worked at Procter & Gamble) and Orin Smith (of Starbucks).

This company has a high potential profitability, much stronger than one might think. Thus, when the animation of its activity part realize good performance, the rest of the group benefits. The Disney action pay 19 times the benefits planned for 2007, what we believe to be very interesting.

In addition, the cruise line Carnival is an interesting company. She was hit this year by the cyclones of the Caribbean and the constant increase in the price of oil. This helped to bring down the benefits and the course of action. However, a good level of profitability should be maintained this year, and therefore a high gross margin of self-financing. The company generates a significant amount of cash that it redistributes to its shareholders as dividends or redemption of shares. In the 1990s, the area was threatened with overcapacity, but the ability is now growing at a measured pace. Vessels displayed a high fill rate, even if this may affect yields. Real growth in capacity is only 5 about this year.

WILLIAM H. MILLER. In the Internet sphere, the mark and the group with less well from their PIN of the game is Yahoo! The title pays the value of business 2008 and low Ebitda multiples for a group of press. While sales and readership of the press have a setback, Yahoo! has 400 million registered users in the world, the world largest Internet hearing. In 2007, the group will deploy new search technology inspired by the implemented by Google. Alone, it will provide the Group 7 at 8 points in additional growth in 2007-2008.

If the Fed relaxation cycle works well, the first company to take advantage will be a large American companies having registered the most poor performance: Citibank. Most of the major banks (JP Morgan, Bank of America, etc.) have had good results this year. Citibank, however, is facing problems of internal structural costs. It is possible to draw a parallel with large companies of Telecom, such as Verizon and BellSouth, which have stagnation for years. When they are up to, they have done 50 growth in one year. We believe that Citibank may progress from 30 to 50 if the Fed cuts interest rates next year. Indeed, even without this, the Bank should save 5-10 growth.

In the more restricted area of technology, Red Hat moves back from 35 to 40 this year. Red Hat is the leader in the area of free software running on Linux, and the action exchange today 23 times the benefits provided for next year. From our interviews with users of this sector as well as Microsoft and Oracle, this trend is the most important of the Decade in the software industry. Action Red Hat Exchange at around $ 17, and we believe that this course will double.

Real estate prices have reached their more down in July, a year to the day after their top. We expect a fall in profits in the sector next year. However, the 2008 horizon, if the Fed began easing in 2007 (March or October), these assets could take a lot of value. Earnings per share will be also important in 2008. Main securities are Centex and Pulte, KB Home.

ALEXANDER FARMAN-FARMAIAN. Research In Motion (RIM), which has developed the mobile handheld terminal BlackBerry, achieved good performance this year. The next year, this product should be reserved for the business community, but extend to the general public. Their new product, the Pearl, is a revolution for all those who must carry several devices in their pocket. This is a version of the BlackBerry of the size of a phone, which contains a directory, and other features. It is rather expensive, but could create the surprise next year. RIM should be a good year. In addition, company has attention to the quality of design and service of its customers.

We also have confidence in Gilead, which produces Tamiflu , drug or vaccine against influenza manufactured by Roche under license with Gilead. The latter company has also developed a new drug, the Atripla™, which brings together in a single tablet several active ingredients used in the treatment of HIV. It overrides the family of tablets most prescribed in the United States today. This new product was very quickly adopted. It is one of the most profitable companies in the world, with a turnover of $ 2.5 billion this year for a profit of $ 1.5 billion.

Finally, I would refer a business that few people know: L - 3 Communications, whose title Exchange at 14 times the benefits. L-3 Communications is evolving in the area of Defense instead of small contracts (control and security, espionage). Problems in the takeover of prevented the course up, but today, if the company continues, the action should take the value. It is therefore an interesting asset.