Geoff Lewis, Global Strategist, Capital Markets Group, Manulife Asset Management, although surprised at the strong ADP jobs data in the US, says it does confirm that the economy is on an improving track and makes a strong case for Fed rate hike next week.
According to him, the US market has already discounted the rate hike move and so it is unlikely to react sharply. It would be wise for Fed to move now than later.The employment in the private sector surged by 298,000 for the month, with goods producers adding 106,000, ADP and Moody's Analytics said. Construction jobs swelled by 66,000 and manufacturing added 32,000.
Seeing the run up in the global/US markets over the past 3-4 months, it is quite possible that they could correct but it would be a shallow one thinks Lewis.
Talking about the outperformance of emerging markets including India despite US yields rising, Lewis feels it is because the growth prospects and the momentum for EMs have improved. Moreover, all the trade talks by Trump don’t seem to be a real threat.
Commenting whether he sees crude falling further, Lewis says it is unlikely. The fall seems to be a bit erratic because the OPEC is still holding its production and there will be a significant drawdown in US inventories. So it could only be a dip and crude is not likely to see a lower range.For entire interview, watch accompanying video.
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