Global Macro: Normalization much more than interest rate hike - Newscape Capital Group

Charlie Morris, Head of Multi Asset at Newscape Capital Group details macro market outlook, the conclusion being policy normalization is much more than just interest rate hike. He is joined by Tip TV’s Zak Mir.

Key points

Global breadth disagrees with the data released earlier this week that showed investors are fleeing Japanese stocks at the fastest rate since 1987

UK, Sterling, Gilt yields

Gilt sell-off due to strong economy and high inflation expectations. Markets don’t understand why we require QE. Sterling is very…very cheap

US, politics

“America ready to vote for Trumpism but not for Trump”, Clinton’s politics will slowly shift to fiscal spending

Taylor Rule

Taylor rule uses unemployment and inflation to reach optimal interest rate. Interest rate is right on the average in Eurozone, but in Germany it should be around 6%...however, the interest rates there are at zero …No wonder, we are starting to see riseing inflation expectations

Policy normalization

Normalisation goes beyond interest rate hike. It also includes things like housing market correction, asset price correction