Markets Could Trade Sideways for Years: Parker

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July 1 (Bloomberg) – Credit Suisse Senior Advisor Bob Parker discusses the BNP Paribas fine and how markets will fair in the low volatility environment. He speaks with Anna Edwards on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

If you ask them for five years ago, it would've been yes.

What we have seen has been a trend increase.

A trend increase in fines.

If we look at fines levied by the u.s. regulators since 2009, we are up to about $105 billion in u.s.. all of that non-us banks in the region of $35 billion u.s. the other theme is the global reach of the u.s. regulators.

It will be bnp and to be fine applied to the sanctions and doing business in countries like sudan and iran.

Is a going to herald a new era of european banks or other businesses globally looking for alternatives to the u.s. dollar or is it wishful thinking of european leaders?

A number of trends will be accelerated.

The first is the deleveraging of think -- a banks' sheets.

To the nonbanking sector whether it be asset managers or shadow banks.

A factor there were was regulators at the moment is who is regulating shadow banking -- and that worries regulators at the moment is who is regulating shadow banking?

I think another trend is a reduction in risk assets on the balance sheets.

One thing that concerns is with reduction by the investment banks, that can lead and i will argue to reduction in liquidity and global capital and that is a point of concern and certain markets like a corporate bonds.

Let's talk about corporate want markets and where you may see a lack of volatility and store go for the future.

Are you worried about the environment?

As an asset manager, we are in a difficult situation and the reason why i say that is we have had a number of very strong trends such as the rally in corporate bonds and compression of the eurozone such as the very strong global equity market rally we have had for five under quarter years.

The loss of those strong trends which asset management has done very well are now looking rather exhausted.

The logical conclusion is we will see a reversal and the trends and i suspected that has not been the case.

I suspect we will go through a period of was we saw from 2003-two thousand seven.

In corporate bond markets, what we have and no one looks at investment grade and we are down to less than 70 basis points, we can trade sideways from here.

This low volatility is a course for concern in both the bond and equity markets.

Many investors will say that obviously we have to do the reverse.

A stronger bear market and developed.

That is the case.

Within get through a time of sideways -- we can get it through a period of sideways.

What makes you confident that we do not see a correction and the second half?

It could be very minor.

What gives you the confidence?

Three factors.

The first is the ecb continues to follow a very easy monetary policy.

Same for the bank of japan.

The fed will and tapering in october and i stick to my view of the first arise will be next march or april.

Monetary policy in the u.s. is moving super easy to easy and it would not be described as the end of next year close to 1% with a nominal gdp is growing by 5%. that is a very easy monetary policy.

The numbers offer a disappointing first quarter the states and weaker dater in europe in april and may.

The numbers will pick up and we will see a robust of growth in the developed world in the second half of this year.

Evil will start to adage, -- even we start to hedge, want to go up at some point a user not see that the end of the stop rally?

Many are underestimating what the central bank is saying.

They have a very clear message.

It does not seem to be getting across a very well.

The interest rates are going to go up but the pace of increase will be very slow and the increase will be very minor.

A raise of 1% by the end of 2015 compared to gdp growth of 3% and installation of 2%. chrissy you mentioned the fed and bank of england.

Stay with us.

Marco carney, one year since he took charge as a bank of england.

-- mark carney, one year since he took charge at the bank of england.

Tom gibson takes a look.

If banks were football teams, mark carney would be just star striker.

When he stepped in, he faced a tough task.

His fans were cheering him on.

Almost right away, he launched his first attack to stop the introduction of first guidance.

Not all of his teammates approved.

Unemployment went down faster than a desperate player in the box.

Just six months after announcing his guidance, garney -- mark carney loosed the goalposts.

Fast-forward today and the u.k. is at the top of the league.

With economy, he may need to go on a counterattack once again.

Central banking, it is a funny old game.

It is a funny, old again.

To governor carty.

-- it is a funny, old game.

-- to governor carney.

Not a great record.

You are comparing a first central bank governor who had a superb track record at the bank of canada and i can go on with the criticism at the moment of mark carney is not justify a you are comparing a mark carney with face, and english football team where the results were not spectacular.

We talked to danny who used to be as the bank and he was saying that he was pretty critical of forward guidance and does not credit it to the u.k. recovery.

He said the bank of england played its part and help to buy and if late it home prices.

-- and it inflated home prices.

Would you give carney credit?

Yes, i would.

Everybody underestimates the pace of recovery here in the u.k. what would've seen in the past 12 months is a continuation of a forecast for the u.k. not the slightly this year are wuhan growth well above 3%. it may subside next year to around 2.5%. even so, it is a good growth recovering and against the background of upgrading expectations not surprising that the bank of england has had to change its guidance on where interest rates are going.

Going back to one key factor you have not mentioned is tough to buy in the real estate market.

We have had substantial audited easing program.

Let's not forget the bank of england owns about 35% of the british government bond markets.

That is injection and liquidity and has been a key factor in boosting.

Critics some of that data before -- some of that data before mark carney.

And the interdependence between the u.k. and eurozone and they were very negative over the past four years and has been the euro crisis.

The fact it has ended and would've had recovery led by germany.

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


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