Look for Fed to Hold Tapering Until March: Wilson

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Oct. 18 (Bloomberg) -- Andrew Wilson, EMEA CEO at Goldman Sachs Asset Management, discusses how the delay in U.S. economic data will cause the Federal Reserve to hold off on tapering of bond buying and offers his expectations of how Janet Yellen will lead the Fed. He speaks on Bloomberg Television’s “On The Move.”

The fed.

We don't really know what we are reading into the next couple of data.

Is there anything you are focusing on a particular?

I think as a reporter was commenting, the next few months of data will be very difficult to read.

From an investment point of view, the fed has the same problem in terms of how do you interpret the data.

I think it is likely that the taper decision is pushed out, probably in qqq one of the next year -- probably into q1 of next year.

If the data turns out really strong then maybe december is on the cusp.

We wouldn't rule that out, but it is going to be hard to interpret the data given the shutdown and the distortions there.

Q4 gdp is likely to be softer, maybe 5/10 softer because of that.

That will probably come back in q1, so it is not all gone.

Some of that activity will be lost and most of it not.

We're going to have to try and read those monthly or quarterly volatility in those numbers to work out exactly what the fed should be doing.

Yet and it will be a lot more difficult than usual because people don't know exactly what they are looking at yet heard that is the million dollar question.

Andrew, are you expecting a more dovish fed whatever happens?

Janet the yellen is one of the great architects of the stimulus plan.

Do you think with the next three appointments president obama will put some hawks in their?

She has been on the record talking about more control.

The market is expecting that as well.

The market has priced that in, we think.

As data gets better, the question is more how is that going to be interpreted.

Some of the other appointments are more on the hawkish side.

As fed chairman she is going to have to balance what all of the members are thinking.

Our view is that it is going to be hard for her to be more dovish than expectations which tends to leave to potential surprises.

Despite the uncertainty around the debt ceiling, data issues, the bottom line is the economy is getting better and the fed is going to start tapering.

So we can debate what munched it is going to happen, but the longer-term trends we think are better.

Typically in these kinds of environments we have seen flows out of the dollar when we have a good environment where the fed is on hold and there's lots of liquidity around it encourages risk-taking.

Easy money flowing out of the u.s.. guessing that the chinese reserves have built up and so there is always these diversification flows as the asian companies accumulate -- as the asian countries accumulate dollars.

It is a much finer act.

We think in general to the dollar should move higher.

That is all supportive of the dollar.

That is a 12 month you.

Talk about market dislocations.

We have doubled the debt ceiling before now, we are back at square one in two months.

If you speak to insiders, maybe january or february.

How do you position your clients ahead of this uncertainty?

I think we will get some read on that earlier.

Hopefully we don't go to that level of uncertainty in the early part of next year.

We have got the budget conference that would take place supposedly reporting back to the middle of december.

This episode has and covered either side and glory.

So there is more impetus to find a solution rather than to go to the brink again.

You can't be sure in politics but we would hope that we don't go through this kind of event again.

It is very bad for business confidence and i think everyone understands that.

We are at that point where the economy is ready to unleash -- capital investment has been soft , flow of funds suggested companies want to do more, this uncertainty is holding them back.

We'll get we don't see a repeat of this in the early part of next year.

How do you position your clients?

Are you taking more risk, are you more cautious?

There is still the political factor which we don't really know how to interpret.

We don't know what next time will bring.

We don't trade we would like to think that as tough as it is going to be, we saw quite a reaction.

We had short-term treasury bills selling a lot.

Yes we had a good rally yesterday when we came in and heard of this news, but we have been in this 2.6-three percent range for quite a while and our expectation is that we are going to see moving back to the top of that range and potentially even out of that range.

I think we put aside the short- term uncertainty.

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

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change