Marc Ostwald, Market Strategist for ADM Investor Services, joined Nick Batsford on the Tip TV Finance Show to discuss the importance of the Fed to diversify monetary policy between central banks, the effect no rate hike in the US has on the ECB, and the outlook for the next 3 months to 2016.
Opportunities as Fed decide to hold rates
Firstly, Ostwald highlighted that there will always be uncertainties to hold the Fed back from raising interest rates, but sometimes you have to go on the front foot. He continued that the world has experienced negative interest rates and QE for 7 years, and it hasn’t worked, creating doubt, uncertainty and an undermined level of confidence in markets. Ostwald noted how some markets had priced in a rate hike, creating opportunities. He finished by adding that with the Fed holding rate and the time of a potential hike being pushed back to the New Year, many investors may be thinking that they are underinvested.
ECB and Bank of Japan awaiting Fed movement
Ostwald made it clear that one can have no confidence in QE as it has failed to work for the last 7 years, and this led to him outlining the ECB and Bank of Japan relying on the Federal Reserve to emphasise that monetary policy between central banks is diverging. He commented that the ECB moving later in the year on their QE extension is possible, but Ostwald noted an underlying need for the Fed to move first.
Next 3 months about the USD and Oil
Ostwald looked to the future, and outlined how it is all about the US Dollar and Oil, which are heavily interlinked. He added the key to the EURSUD will be whether the ECB plays out its drawn out game of “we could do more”. In terms of Greece, the segment finished with Ostwald commenting that it faces a tight timetable to make changes before it receives the bailout terms, but the markets have other concerns including China and the US.