"Uneasy" is too mild a word to describe the prevailing frame of mind on Wall Street as the stock and bond markets approach the mid-way 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 Minnea-po-lis. "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 Corp. 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.
Deflation talk inspires a rush to buy long-term Treasury bonds, which enjoy a long-standing reputation as the world's safest credit risk. Rising bond prices have driven government bond yields down in recent days to their lowest levels since the 1960s and early 1970s.
That same deflation talk gives very little comfort to stock investors, who have corporate earnings prospects to worry about.
Investors who can't sort out where all this will lead can protect themselves to a considerable degree by staying diversified between stocks and bonds. "The way you buy low and sell high is to keep rebalancing," says Bill Dawson, who oversees bond investments at Federated Investors, manager of a $96 billion fund family in Pittsburgh.
As the stock bull market has aged, increased fears have been raised that a crack-up on Wall Street might do a lot of damage to the Main Street producing and consuming economy.