Y2k

             Y2K pessimists are approaching their moment of truth. In seven weeks the world will, or will not, run into more trouble than most people think. Investors will, or will not, suffer last-minute jitters as the millennium draws near.
             Yes, yes, I know-it's not yet the millennium, from a technical point of view. As a stern band of readers likes to remind me, only morons believe the millennium falls on Jan. 1. The 1,000-year span actually ends on the year's last day, Dec. 31, 2000.
             Well, that may be their millennium, but it's not mine. I'm partying now. A more interesting question than calendar dates is whether the stock and bond markets will be partying too. Has the Y2K selling already happened (as I believe) or will it erupt in the final days? If there's the usual year-end rally-and last Friday looked good-will we wake up with a hangover?
             When you read this, the Federal Reserve will probably have made its latest decision about interest rates (its open-market committee meets on Tuesday, Nov. 16). Either result-rates up or rates flat-should be good for stocks, says economist Irwin Kellner of Hofstra University in Hempstead, N.Y. Investors will feel more secure for the next few months. The markets don't expect the Fed to raise rates in December, on Y2K eve, or in early 2000, when business conditions might be distorted by the millennial bump.
             Rate hike: After that, investor concern about interest-rate increases may resume. The Fed wants the economy to slow, to ward off the inflation that could arise from tight labor markets and global growth. You're seeing some cooling already in housing and auto sales, but perhaps not enough. "We're thinking one or two modest rate hikes, over six to nine months," says economist Allen Sinai, president of Primark Decision Economics in New York.
             Even so, hardly anyone mentions the R word. A recession could always arise from an unexpected shock, but none of the conventional signals are flashing red.
             ...

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Y2k. (1969, December 31). In MegaEssays.com. Retrieved 02:02, March 29, 2024, from https://www.megaessays.com/viewpaper/43669.html