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Seven Surprises for the Second Half of 1999

Got a different view of the next six months? Drop me a line.

The first half of the year has seen its share of surprises. The stock market, while not racing ahead, remains firmer than most year-opening

skeptics expected. The U.S. economy shows few signs of slowing, and investors continue to flock into stocks.

Still, the same concerns that dogged the market at the start of the year persist. How long can all this good stuff last? The Net-stock boom continues to roll, but signs of fraying are clearly visible. Not every dot-com IPO is a home run anymore, and the offering calendar is clogged with doggish companies. Tossed into the mix is the specter of rising interest rates. Just about everyone expects the

Fed

to start raising rates; the question is, when will the Fed stop? One hike might be OK, but two or more moves would create more jitters. It promises to be an interesting second half.

With six months gone, and six to go, let's take a stab at seven possible surprises for the remainder of the year. These are meant as educated stabs at the unexpected, and nothing more. But it's fun to try to anticipate that which few expect. Recall the summer before the last

George Bush

ran a presidential campaign? He had enormous post-Persian Gulf War popularity and seemed invincible. Of course, he lost to

Bill Clinton

. That's the kind of surprise we're seeking.

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Seven Surprises for the Second Half of 1999

    The Y2K bug problem will be considered largely solved in the U.S. But problems in other countries, primarily in Russia and in developing nations, will create widespread concern about global transactions. The Fed will be forced to go easy on monetary policy as nations around the globe move to solve the problems at the end of this and beginning of next year. George W. Bush, unable to avoid a series of fall gaffes, will slide in the polls. This will coincide with a tightening race in the Democratic primaries between Al Gore and Bill Bradley. The 2000 election, once considered a two-horse race, will become more complicated. The market, happy with political confusion, will trundle ahead. Oil prices will fall. Despite widespread concern that improving Asian and European economies will start to push oil higher, a surge in production will offset the pressure. While oil will not touch the lows reached in 1998, the easier price outlook will help allay percolating inflation fears. Widespread consolidation will hit the Internet. The pace of change on the Net, already awesome, will accelerate, and big companies will make more bold moves to harness the new medium's powers. That means that many independent Net companies will have to link up or find big backers in order to compete effectively. The Balkans will cool down, but war will sprout on the Asia-Pacific periphery. Taiwan or the Korean peninsula will present the next hot spot. For investors, this will call into question the nascent Asian recovery. The conflict will include a China-U.S. tango that will make a nifty prelude to the dawning century. Despite the Asian conflict, Japan's rebounding economy will weather the storm. Left for dead, the Japanese will end the millennium with strong prospects. The nation's surprisingly fast embrace of the Internet will once again make Japan a powerful economic force, despite prevalent doubts throughout the Western world. The U.S. will win the Ryder Cup. Phil Mickelson, his new child in the crowd, will clinch the win with a gutty putt on the final day. Yeah, I've been playing way too much golf lately.

Right or wrong? I'm sure you've got some better surprises. Fire them my way at

dkansas@thestreet.com and I will get a list of them out right away.