Newspaper article THE JOURNAL RECORD

Street Sees a Delicate Balance at Mid-1998

Newspaper article THE JOURNAL RECORD

Street Sees a Delicate Balance at Mid-1998

Article excerpt

NEW YORK -- "Uneasy" is too mild a word to describe the prevailing frame of mind on Wall Street as the stock and bond markets approach the midway point of 1998.

Certainly, there is a lot for investors and brokers to celebrate, given that stock and bond prices have both climbed to new bull- market peaks in the first half of the year.

But as the markets have kept rising, so have anxieties that the long financial boom might be running out of time, or good fortune, or both. So investment commentaries of the moment are filled with advice on how to protect yourself from trouble. "The current economic expansion, now in its eighth year, is very mature by historical standards," says Daniel Laufenberg at American Express Financial Advisers in Minneapolis. "Age alone is not enough to end an expansion. What usually happens is that pressure points develop that ultimately choke the economy." Potential weak spots are easy to find. There's the Asian financial crisis, for starters, and the jolts it has dealt to currency markets as well as stock and bond prices around the world. "The U.S. is now benefiting from Asia's problems," note analysts at Standard & Poor's in the midyear forecast issue of that firm's weekly publication The Outlook. "But it's a balancing act, which could be upset by any of a number of developments. "Further deterioration of the massive Japanese economy and continued weakness of the yen, or a Chinese currency devaluation, for example, could force the reeling Asian economies into depression and heighten the threat of global deflation." The mere suggestion of such possibilities has already had one notable effect in the U.S. markets -- sending stock and bond prices, which have often moved together over the 15 years since the start of the great bull market, scurrying in opposite directions. …

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