Marc Ostwald, market strategist at ADM Investor Services, joined Zak Mir on the Tip TV Finance show to discuss the impending Federal Reserve rate hike and the confusion surrounding Yellen and the US economy.
Yellen doesn’t want to be responsible for a stock market crash
Ostwald highlighted the constant noise this week from many regional Fed presidents, but outlined that only 3 matter: Fischer, Dudley and Yellen. Yellen has remained quiet as she attempts to avoid being the one responsible for a global crisis 2.0, meanwhile, Ostwald noted that Fischer had made the emphatic point that the Fed was right to look through the current inflation situation. He also added that some other countries have made it clear that the Fed needs to get on with its decision concerning a rate rise.
Non-Farm Payroll numbers a bit of a red herring
Mir outlined how everyone gets excited about the non-farm payroll numbers, but actually he believes they are a bit of a red herring as they mostly come out as expected. In terms of the most important data in the US, Mir noted US GDP, whilst Ostwald expressed his belief that the small business barometer including job creation and loans are the most crucial, which covers 94% of US jobs. Oswald finished by commenting that newer data is subject for revision and that the older data will prove more important to the Fed rate hike situation.
What are the effects of a rate hike on the global economy?
Ostwald noted the downward pressure from energy prices and the uncertainty over China and the asset market posing a possible threat to the US. But Ostwald dismissed the panic and stated that people will have to get use to the volatility in all markets, noting the S&P 500 which is experiencing great liquidity. Ostwald also outlined his belief that markets have pre-empted a lot of the crash, and that a fed rate hike may actually calm the situation down, assuming they raise rates in September.
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