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To: TIGGY who wrote (15797)	5/1/1998 1:24:00 PM
From: JSI	Read Replies (1) \| Respond to of 31646

"He predicted mergers and acquisitions activity will decline in the second half of 1998, and that prices for ensuing deals won't be as lofty as in the recent past." I have to disagree with this part of the article. I would think that you will see mergers and acquistions become much more commonplace. As smaller companies ($50MM to $250MM) come to terms with the incredible cost of becoming Y2K compliant, they may have to face the decision of selling out, vs. trying to pay for the fix. This opens the door for larger companies, who have already begun their Y2K conversion process, to step in and pick up the pieces. I realize that there is difficulty involved with migrating one business system into another; however, it is very possible that it would still be much cheaper than trying to convert to Y2K compliance. I would watch small to mid size (especially local banks with anywhere from 2 to 10 branches), small utility companies, insurance companies, etc. We may not see large mega mergers like DEC and Compaq, but there will be probably be a glut of smaller ones to make up for it. IMHO JSI

To: TIGGY who wrote (15797)	5/1/1998 1:38:00 PM
From: crc	Read Replies (1) \| Respond to of 31646

<<Edward Yardeni, chief economist at Deutsche Morgan Grenfell, who continues to speak out on the year 2000 problem, said bond yields could decline to 5% in 1998, 4% in 1999, and 3% in 2000. 'You might as well buy zero coupon bonds, cause they'll be that anyway,' Yardeni said.>> While I accept Yardeni's forecast that a worldwide recession is quite possible, if not probable, due to Y2K, I am not convinced zero coupon treasuries are the place to invest. I am increasingly coming to the conclusion that Y2K will cause us to experience bottlenecks or "supply shocks" throughout the economy. Just because we have a recession doesn't mean we will have prevailing deflation. I am looking for an increase in prices in "neccessities" and for a decrease in prices in "luxury goods" post 1/1/2000.

To: TIGGY who wrote (15797)	5/1/1998 2:44:00 PM
From: R. Bond	Respond to of 31646

Tiggy, FYI: US hedge funds: Investors bet on banking paralysis MONDAY MARCH 16 1998 By Simon Davies Capital Markets Editor ----------------------------------------------------------- US hedge funds have taken substantial bets in the financial markets that the millennium bomb will paralyse the banking system on January 1 2000, forcing interest rates higher. Futures brokers said there had been heavy selling of December 1999 futures contracts in US and German interest rates, in a financial transaction nicknamed the millennium fly. A trader in New York said more than $5bn of contracts had been sold. These investors believe that computer problems will cause significant financial disruption, driving up bond short-term interest rates. This would substantially reduce the value of any interest rate contracts that straddle the beginning of 2000. The millennium bomb has arisen because many computers will be unable to recognise the year 2000. This could disable programs after midnight on December 31 1999. So far, the millennium bomb has had a limited impact on financial markets. It has driven up the price of some information technology stocks, owing to consultancy fees that could come from sorting out computing problems. The millennium fly is a so-called butterfly spread, where the investor sells December 1999 contracts, and buys September 1999 and March 2000 contracts. This would be highly profitable if short-term interest rates rise sharply between December 1999 and March 2000, when the 3-month interest rate agreement expires. The activity has all been concentrated in Eurodollar and Euromark contracts, which are based on US and German interest rates. However, brokers suggested that investors might take positions in bond futures also. One trader said: "In December 1999, money could become very expensive. People will be out partying for the millennium, computers could be breaking down, and so there could be a scramble for cash. This would be made worse if the bomb has a broader economic impact." Other investors suggested that the hedge funds were scare-mongering in the hope of making a very short-term profit. Thomas Juterbock, head of US and European government bond trading at Morgan Stanley, said: "It is very hard to discount events that far out. Besides, the market probably hasn't thought enough about what the Central Bank response to this will be, which will be to provide liquidity in a time of uncertainty." He said that there would probably be an additional bank holiday over the millennium period, providing more time to resolve any difficulties. c Copyright the Financial Times Limited 1998