The collapse in old-economy stock prices may ultimately
impact on new-economy stocks, according to noted bear
and editor of Barron's magazine, Mr Alan Abelson. "The
word is beginning to trickle out that even though interest
rates don't count for new-economy companies, rising
rates do hurt old-economy companies, and, rumour has
it, old-economy companies and their employees are the
main source of business for new-economy companies,
including those who ply or supply the internet," he said.
Concerns of higher interest rates are exacerbating the
bear market in traditional cyclical stocks.
"Barring a US equity market setback, the Fed will raise
rates by another 50 to 75 basis points in coming months
to slow growth," said Mr Kim Scheoenholtz, chief
economist at Salomon Smith Barney.
The rises, before June, should achieve a soft landing
rather than an abrupt setback, he said. `However, the
stronger economic momentum and asset markets
remained, "the greater the risk of a more disruptive
slowdown down the road as interest rates rise".
afr.com.au
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