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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: RagTimeBand who wrote (6656)	9/24/1998 1:19:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 9980

Emory, let me take a stab at your question. Yardeni is very worried about the impact of Y2K, and it surprises me, since he is a "macro-economist". In terms of the macro economic impact, I think that Y2K will at worst be a non event and at best increase expenditure of corporations on final demand, thus increase economic activity. Sure, those companies that did not take Y2K into account few years back might have a negative impact on their bottom line, but this impact would be an expenditure showing up as a positive impact on other companies' (such as Keane) bottom line. On balance, I see a little additional economic activity which will be balanced, IMHO, by declines in commodities (the deflation theme), and thus almost a non event. Where I disagree with Henry, is about the potential for a recession next year. If, as I expect, the final blow to the Asian markets is still to come (before Japan finally faces the facts of life and does something drastic to increase domestic consumption), then weakness south of our border will start to have an impact on our economy as well (a lot of our trade is in this hemisphere). Like Henry, I do not expect a "big" recession, but there is, IMHO, a solid chance of two consecutive declines in GDP. This will finally give the FED's the excuse they'll need to bring their rates in line with existing market rates, and serve as the "signal" for the resumption of a bull phase in the market. Zeev

To: RagTimeBand who wrote (6656)	9/24/1998 1:34:00 PM
From: Henry Volquardsen	Read Replies (3) \| Respond to of 9980

Hi Emory, I'm not an expert on Y2K so I don't know all the potential impacts. I know my firm has tested all it's systems and we are ok. I have heard anecdotely from a number of people in the financial services industry and everyone appears to have taken it pretty seriously. From what I have gathered from the people that I have spoken to about this is that on software applications most institutions that spend the money will be ready. The question comes with emerging markets and government who generally don't have the money. I don't know what the impact from those will be (Hell it may even help the economy if the IRS computers blow up <g>) The one area of concern is embedded chips, particularly in the utility industry. It is a problem there but they are aware of it and working hard to address it. But overall I am not factoring in anything for the Y2K situation since I don't have the faintest idea what the impact will be. My educated guess is it will have an impact but not major (less than 1/2% on GDP). I know one person who actually believes it will boost the economy as corporations go on a spending spree buying compliant technology to eplace existing systems. Henry