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00:00A QUIET OR MODEST FEBRUARY. WE HAVE SEEN 15 MONTHS OF POSITIVE GAINS IN THE S & P AND THIS IS THE FIRST NEGATIVE. THE QUESTION IS, WHERE DO WE GO FROM HERE. IF YOU LOOK AT THE AVERAGE VOLATILITY, IT ' S PROBABLY HIGHER BECAUSE MARKETS NEED TO DIGEST THE TURNAROUND. I THINK YESTERDAY, WHAT WE SAW IN THE SELLOFF, ARE SOME FEARS THAT THE U.S. ECONOMY IS TOO STRONG AND THE CENTRAL BANKS, ESPECIALLY THE FED, NEED TO BE DONE JUST THE MARKETS. HOWEVER, THEY SAID THEY DON ' T NEED TO CHANGE STRATEGY. AND THEY THINK INFLATION IS COMING BACK VERY QUICKLY. FRANCINE: DO YOU WORRY THAT THE U.S. ECONOMY IS OVERHEATING? JANET YELLEN HAD A VERY SIMILAR BLUEPRINT FOR THE FUTURE BUT THE MARKETS REACTED A COUPLE WEEKS AFTER THAT. CHRISTIAN: I THINK THERE IS A RISK THAT THE ECONOMY IS OVERHEATING BECAUSE THERE ARE ADDITIONAL PUSHES LIKE TAX REFORM AND THE INFRASTRUCTURE PROGRAM COMING IN AND WE NEED TO WATCH THAT. BUT WHAT IS KEY FOR THE MARKET IS INTEREST RATES AND INFLATION. IF YOU LOOK AT INFLATION, IT ' S DRIVEN BY WAGES. IF YOU SEE WHAT WE SEE ON THE PRODUCTIVITY SIDE, WE SEE INCREASING PRODUCTIVITY NOT AS FAST AS IN THE PAST. WE NEED TO WATCH IT BUT WE DON ' T NEED TO COMPLETELY CHANGE THE PICTURE. FRANCINE: WHAT DOES IT MEAN FOR EMERGING MARKETS? > > THEY HAVE BEEN WEATHERING THE STORM QUITE WELL. FOR EMERGING-MARKET VALUATIONS AND REAL YIELD, IT ' S RELATIVELY HIGH. LOCAL YIELD CURVES ARE RELATIVELY FLAT. THEY ARE PRICING IN QUITE A LOT OF HIKES RELATIVE TO WHAT THE MARKET IS EXPECTED TO DO. FRANCINE: DO ANY COUNTRIES LOOK MORE ATTRACTIVE IN THIS ENVIRONMENT? LUPIN: I THINK SOUTH AFRICA LOOKS VERY ATTRACTIVE FROM A DURATION PERSPECTIVE AND A FIXED INCOME CURRENCIES PERSPECTIVE.

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U.S. Economy Risks 'Overheating,' Says Deutsche Bank's Nolting

Christian Nolting, global chief investment officer at Deutsche Bank Wealth Management, and Lupin Rahman, head of EM sovereign credit at Pimco, discuss global markets. They speak with Bloomberg's Francine Lacqua on "Bloomberg Surveillance." (Source: Bloomberg)

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