Alex Friedman, global chief investment officer at UBS AG (UBSN), comments on the outlook for the U.S. economy following the presidential election, and his investment strategies for the U.S., Europe and China. He spoke in an interview with Zeb Eckert on Bloomberg Television.
On U.S. election:
“Regardless of who wins the presidential election, the rhetoric we’ve seen will give way to the realities of having to tackle what is an unsustainable fiscal path today.
“Whoever is president is going to have to cut spending and they’re going to have to deal with the existing entitlement process that is unsustainable.”
On U.S. investment strategy:
“The U.S. is basically on the right trajectory. It’s skirted recession, it’s growing sub-trend but it is growing. Housing has turned a corner but very slowly. So we continue to see the U.S. moving positively. We’re overweight U.S. equities, we’re overweight U.S. high yields, we’re overweight investment- grade credit in the U.S. We’re taking a lot of our risk on the credit side.”
Europe still presents some real risk, although Draghi has taken off some of the near-term risk with his bond purchase program, essentially stepping in as a lender of last resort.
On China and emerging markets:
“China, we are more positive on, and have been for a while. The emerging markets generally present an attractive story and ironically their fiscal profile is much better than the developed markets.
“Investors like clarity so as we move past this week in China, it’s a positive story. Emerging market currencies overall are very positive for us. A basket of currencies is an interesting way for investors to get exposure to this region and helps diversify some of the risk.”
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