Fed’s Yellen Puts Markets on Notice

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April 1 (Bloomberg) -- Ameriprise Financial Chief Market Strategist David Joy previews today's markets and discusses his investment ideas with Betty Liu on Bloomberg Television's "In The Loop." (Source: Bloomberg)


I wanted bring in our call guess now.

I want to bring in david joy of america prize financial.

His call that yellen did not make an initial rookie mistake and talk about raising interest rates but put the markets on notice.

You said that was the right move by janet yellen.

I think it was.

I think it is important to point out it is all data dependent.

Once they unwind quantitative easing, sometime around the start of the fourth quarter is sheer, looking to see if there has been enough progress, and if there is, that six-month progress comes into play.

That took the market by surprise.

You saw a little bit of a wobble in the equity market.

I think it is the right call.

I think also they took it too literally.

Almost like she was trying to find a way to hedge an answer.

The market took the six-month time frame very literally.

Lex i think six months is a reasonable amount of time to assess just how strong the economy is and whether or not it is appropriate to raise rates.

Keep in mind, after the first raise increase on the theoretically it will only be one half of one percent.

Hardly restrictive in that regard.

Maybe that was a little bit much of a reaction.

I know there are a couple of groups you like that you are buying right now.

We do believe the markets will go up from here.

Rex most banks -- most banks did pass the stress test, citigroup aside.

Citigroup and bank of america vote had to resubmit plans and that means they will not pay out the dividends into the buybacks they initially hope to.

Earnings growth of the screen, overall for the second quarter will be 3.7% for the s&p 500. over here financials pretty much flat.

Looking at losses for the second quarter.

Even if the regulatory clouds have parted, still doubt about how much money these things will bring in.

I think it is an environment where in the immediate term earnings will be under pressure but the operating environment is improving.

You will see an ongoing increase in consumer or loans, increased capital markets activity.

These starts are relatively cheap.

Under 10 times earnings and low price to book a people's. i think it is a long-term play on the economic recovery story.

Julie digging further into the region and what is going on there with the return.

I want to talk specifically about the news from europe in terms of economic data.

Specifically, pmi for very -- various eurozone countries.

Showed growth and improvement in some of the areas that had been the worst performing areas.

Ireland or spain, multi-month, in some cases multiyear highs.

France also added 33 month high.

You have that as a bright spot.

You also have unemployment numbers that are still not great, particularly the new look in the pockets.

Overall euro area improvement, 11.9% among which was better than economists estimated.

You still have the divergence between the likes of italy where unemployment is still at 13% and germany under seven.

We have had a lot of renewed interest in europe over the past year.

You still have the issue of there are areas that continue to struggle, italy and greece as well.

Where do you buy then?

You had to concentrate once again in the core countries.

If you look at the eurozone and the aggregate, clearly it is not robust but it is a recovery.

Last year shrank 5.4% in terms of economic growth.

The eu estimates one point two percent growth.

You also have a central bank that remains very accommodative, and perhaps more so.

We will find out later this week whether they add stimulus.

It looks as though they are further behind the u.s. and bank of england in terms of our restrictive they're going to be going forward.

There is an additional monetary support that may no longer be the case in the u.s. and england maybe 12 months from now.

Thank you for joining us.

David joy of america rise.

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Stay "in the loop." ?

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