Stephane Deo, Head - European Economic Research, UBS expects US Federal Reserve chairman Janet Yellen to hike interest rates only in the second half of next year.Below is the edited transcript of Stephane Deo's interview with Latha Venkatesh and Sumaira Abidi on CNBC-TV18.
Latha: What do you expect to hear at Jackson Hole today?
A: We have the FOMC meeting’s minutes recently and very clearly the Fed is now starting to talk about rate hike. So, we don’t think a rate hike is imminent. We are waiting for Q2 next year but as you know the tapering of QE will come to an end probably in October. So I think the next big debate will be when and how the Fed will normalise rates. I think that is the key debate. So I would expect Janet Yellen to tell us more about that and especially to tell us more about the big question mark which is the labour market. That for me is the key question mark for the Fed.
Sumaira: Overnight we have seen the US markets inch higher so the S&P 500 is now at the cusp of 2000, what do you think could trigger a move beyond that technical level for the S&P 500 and also for the rest of the global markets, what is your expectations?
A: We are still positive on the global market. We have reduced quite significantly on the risk on our portfolio at the beginning of the summer because we thought the market was a bit stretched and we did had the correction especially in Europe but also in US. I think we had several data point in the US, the reporting season has been good. So for me the valuation are very close to fair value. With a recovery going on, you should expect earnings to increase and so I see no reason why the S&P would not go above 2000 in the near future.
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