Monday, January 12, 2015

Bob Janjuah on Fed Rate hike possibility

What has surprised me, however, is how many people are now openly talking about QE4 and no Fed hikes until 2016/2017. My key point here is that I do not believe the Fed is going to do anything substantive on the easing front anytime soon, but over the next 12 months 50/50 seems a fair assessment to me.

Monday, January 5, 2015

US Consumers will have to continue spending in 2015 to keep economy rolling

If I boil 2015 down to one thing, it will be the US consumer – on the basis that the US is the relative bright spot in the global economy. For 2015 to end up being a bullish year for risk assets with attractive Sharpe Ratios I think the US consumer will have to deliver as I see no other obvious driver of global economic growth and inflation. 

There will need to be US consumption growth of 4% to 5% if this bullish outcome is going to play out. 

This will require the US consumer loading up on debt again. As of now, I rate this as only a slim possibility rather than a probability, hence my views in the paragraph above. 

As mentioned I will revert on all of this with more thoughts and detail early in 2015, and of course the outlook for crude oil and the geopolitics behind the crude price will be something I will focus on.

Suffice it to say that the idea that lower crude oil prices are necessarily a net positive for the US consumer is, in my view, overly simplistic and not even necessarily correct.