MORE: UBS WM Says ’Brexit’ Turmoil Could Stop Fed Lifting Rates
(Bloomberg) -- Bernanke’s Fed was clear politics doesn’t influence them and QE2 was announced on election day but if market is in turmoil around the referendum on EU membership, that could stay the Fed’s hand, Mark Haefele, global CIO at UBS Wealth Management, says in interview.
- Expect Fed to raise rates in September, December this year and March 2017; as U.S. economy is doing better UBS WM is bullish stocks and has upgraded U.S. equities to overweight from neutral
- Have some sympathy with St Louis Fed James Bullard’s view that there was a case for lifting rates in March and maybe in April
- The Fed’s June meeting is right before the Brexit referendum and then the Republican primaries and the U.S. election season
- UBS WM is neutral U.K. equities and neutral sterling; says one possible way for investors to hedge before the June vote is by buying FTSE 100 dividend futures and selling the index, as dividends keep going even if market sells off
- Sterling weakness would help FTSE 100 companies which derive 3/4 of sales from abroad
- The risk that central banks can’t generate inflation is somewhat overstated, particularly in Europe
- ECB’s TLTRO II shows that Europe is continuing to find ways to stimulate and they’re not done
- NOTE: UBS WM upgraded global and U.S stocks to overweight from neutral
- Turned neutral on U.S. HY bonds vs overweight, a position it held since Feb., after rapid outperformance
- Maintains overweight in European HY and European equities
- NOTE: Mark Haefele oversees the investment strategy for $2 trillion in assets
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Mark Haefele (UBS Asset Management Japan Ltd)
Ben Bernanke (Brookings Institution/The)
James Bullard (Federal Reserve Bank of St Louis/MO)
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