In Danger of Central Bank Liqudity Trap: MacDonald

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Oct. 29 (Bloomberg) -- Lucy MacDonald, CIO for global equities at Allianz Global Investors, discusses the reliance on quantitative easing, how long it may take for the Federal Reserve to begin tapering of its bond buying program and how the decisions affect her investment strategy. She speaks on Bloomberg Television’s “On The Move.”

Lucy with allianz global investors.

Trichet said he doesn't want to weigh in on what the fed should do.

Is there a danger that we're in a q.e. trap?

There is a danger.

There is a danger of asset bubbles as well.

When you look at the market as a whole, it is only really supported by that loose monetary policy.

And the big reevaluation you had in equities this year.

That is the support.

And we are used to it.

Any sign that it is being removed as we saw in the summer, you get a big negative reaction.

We need to see the economy beginning to move with a little bit more strength.

But at the moment, in the u.s., you're seeing the reverse.

So we know that the fed's decision smage dated.

The data has become weaker and at the same time you have more uncertainty because of the budget talks.

So although it is a consensus view, it seems as if the tapering is going to be further out than it would otherwise be.

Is there any chance that they may add to q.e. or is this too farfetched?

At the moment, it doesn't seem to be -- it is not a crisis.

The environment has deteriorated.

Not severely, but just not really getting stronger which is what he would like to see.

We spoke maybe six weeks ago.

Has anything changed dramatically since i spoke to you last?

The markets have continued to strengthen.

The upside is less than it was.

As far as where we want to be in the world, that hasn't change.

Have seen more value outside the u.s. rather than inside the u.s. it is a little bit more mixed but we can get back to that later when we talk about the different areas but i think there is a slightly different mix to that.

I'll ask you about industries in a second.

Talk to me about europe.

Draghi is facing a stronger euro and is not really doing anything about it.


i think that is beginning to show in some of the corporate earnings now.

We're only 1/3 through the earnings season in europe.

You are already seen some downgrades on the basis of currency.

That might be a feature if it continues in this direction.

One thing you like is tech.


This hasn't changed.

You have liked tech for some quarters.

What is your favorite?

Travel, pricelines of the world.

Google has come up with good numbers.

That is looking better supported than it was.

Even microsoft has come out with better numbers as well and amazon too.

A quite nice reacceleration there and less concern in investment making.

This text has been automatically generated. It may not be 100% accurate.


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