John Eade, President of Argus Research, joined Nick Batsford on the Tip TV Finance Show to provide an overview on the US economy, including views on the Federal Reserve, Q3 performance and growth across different sectors.
Q3 worst for many years
Eade outlined that the rest of the 3rd quarter in the US is going to be crazy, with it being one of the worst for many years, and he believed we will see more selling before the start of Q4.
Time for Fed to step forward
Eade believed it is time for the Fed to boost interest rates in the US, as further holding of the historic low rates is causing greater uncertainty in the markets. He insisted that a 25 basis point hike will not have a drastic effect on the US economy, and then the uncertainty surrounding when the Federal Reserve hike is coming will be removed.
Good solid growth in the US
Close to 3% GDP is the verdict from Eade over the US GDP release on Friday, with him concluding that this is good, solid growth. He noted that the industrial sector and oil patch have been effected by lower oil prices having been hedged higher earlier in the year. However, the effect this would have on the US economy will be offset by low unemployment and the consumer sector which is saving money at the pump. Eade added that the healthcare and technology sectors have been doing well in recent months.
On the Volkswagen (XETRA:VOWG) emission scandal, Eade compared it to Toyota, and summarised that it will take years for VW to recover as it is hard to regain a reputation for quality.