Tags: fed | rates | economy | investors

Investors Must Stay True to USA, Don't Be Swayed by Global Temptations

Investors Must Stay True to USA, Don't Be Swayed by Global Temptations

By
Wednesday, 13 April 2016 07:44 AM Current | Bio | Archive


Three Fed speakers have given us their visions on the U.S. economy and future rate hikes.

Philadelphia Fed President Patrick Harker said in a prepared speech:

“I do expect some faster wage growth going forward, and accelerating wage growth could translate into more robust inflation … it might prove prudent to wait until the inflation data are stronger before we undertake a second rate hike."

From his side, Richmond Fed President Jeffrey Lacker said he thinks the Fed will likely have to raise interest rate around four times this year.

Finally, San Francisco Fed President John Williams said, “I definitely see two or three rate hikes ... as being reasonable this year ... it doesn't matter so much whether we were to raise rates in April, or June, or...July. What matters is the path of interest rates and kind of the normalization process... As long as, I think, we stay on this kind of basic path of raising interest rates gradually over the next couple of years, that's kind of what's important for financial conditions.”

Anyway, what’s for sure is that the recently revised data and the revisions to data have shown more growth and more inflation progressively being added to the U.S. economy over time.

At the same time markets have been valuing recent data despite the IMF downgrading growth.

It might be good to recall the IMF has been continuously above consensus in its estimates and its latest downgrades, yes plural, were simply bringing their estimates in line with reality.

Notwithstanding the IMF calls the world economic growth outlook “Too low for too long”, it also states the recovery is projected to strengthen in 2017 and beyond, driven primarily by emerging market and developing economies, as conditions in stressed economies start gradually to normalize.

In context of the latest IMF World Economic Outlook and looking at the outlook for the U.S., Lloyd Blankfein Chairman and CEO and Gary Cohn President and COO of Goldman Sachs seem to be more optimistic than the IMF as they write in the recently published Goldman Sachs 2015 Annual Report:

“While we must consistently try to “see around corners” to anticipate problems, we also see plenty of reasons for optimism. We see the U.S. nearing full employment, signs of modest inflation and some stabilization in equity and commodity markets. We don’t see how a world of zero or negative interest rates could possibly be the “new normal.”

I think that speaks for itself.

The Chinese export numbers were better than expected proving better growth in spite of the fact of the “seasonable” effects and the stronger euro that certainly have made these figures stronger, but their real impact is very hard to estimate.

However, and investors could do well paying attention, the current stage of growth, at least by judging from price action and the patterns of job creation, may be rather more focused on “services” than on retail sales.

Long-term investors who have U.S. based investments shouldn’t start looking to switch them abroad. The U.S., despite its politicians' claims to the contrary, obviously isn't perfect, But America doesn’t have to tackle the same challenges all the other important places are facing.

At least, that’s how I see it.

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments. To read more of his articles, GO HERE NOW.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
HansParisis
Long-term investors who have U.S. based investments shouldn’t start looking to switch them abroad. The U.S., despite its politicians' claims to the contrary, obviously isn't perfect, But America doesn’t have to tackle the same challenges all the other important places are facing.
fed, rates, economy, investors
566
2016-44-13
Wednesday, 13 April 2016 07:44 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved