Anshu Jain, Co-chairman and Co-CEO of Deutsche Bank is cautiously optimistic about the health of the global economy. Speaking to CNBC on the sidelines of the bank's Global Financial Services Investor Conference, Jain said that normalisation of US bond yields was very constructive.
Sharing views on US Federal Reserve's quantitative easing (QE) programme, he said that Fed may end bond buying program by end of 2013 or Q1 2014 latest.
Below is the verbatim transcript of Anshu Jain's interview on CNBC
Q: What are the highlights coming out of this conference, what are you learning?
A: USD 14 trillion represented in the audience, so it is definitely one of the most powerful gatherings of investors from all around the world. It is a note of cautious optimism, in contrast to this time last year where there was lot of discussion around the possibility of European default, a US double dip, a Chinese hard landing. Even though there are cautionary notes which were hit, for most part I would categorise the motion as being cautiously optimistic.
Q: I want to get into Europe and get your take on that in a moment, but given your wealth management business and your exposure to business with your huge investment bank and capital market type businesses, what do you think these markets tell us, we got another selloff today, we had volatility last week? Is there a sentiment shift underway?
A: Not really. You are referring to a normalisation of bond yields which has been going on over the course of last month and some of the attendance softening in credit market, which is very constructive. At some point, the bond buying program will come to an end and when it does, it will have an impact on the overall term structure of interest rates particularly and you are seeing some evidence of that, but I would not over interpret that.
Q: What about the Federal Reserves tapering, this has become the new topic and everyday we get another headline? What is your sense in terms of impact on business? When do you expect to see rates moving in a sustained way?
A: Deutsche Bank has a research forecast on this. We are calling for higher US growth than most of our peers and as a consequence we are also calling for an end to the bond buying program maybe by the end of 2013, latest Q1 2014, that's our official forecast.
Q: Do you have a strategy around that? Have you capitalised as the Fed changes its position?
A: We do not have a strategy as proprietary trading is not something which banks do anymore. So, it is the case of advising our clients and making sure we are well positioned to capture market share from the consequences of that development. If indeed that development comes through.