Hello Mia. We think that it should end its net asset purchase programme relatively quickly during 2018 (mid-year), confirm that it will reinvest the proceeds of bonds maturing for the foreseeable future and reaffirm its intention to keep short-dated interest rates very low for some time, at least until they are confident of a self-sustained increase in headline inflation towards their medium term target of, "below, but close to, 2%"
Thank you for your answer.
What about the FED ? Do you expect an increase of interest rates by the FED by December ?
Yes, it is very likely that it will happen again. We look for another three rates hikes by the Federal Reserve in 2018 also
Do you think that the increase of interete rate will be accelerate by inflation in the US ?
This is really interesting but don't you think that this spread of interest rate between Europe and the US will devaluate the Euro?
A central bank is monitoring risks around its inflation forecasts as well as financial stability risks associated with a long period of low interest rates. As a result, there will probably be an increase in the cost of money, regardless of whether inflation increases much from current levels
Thank you very much
Who do you think should lie the next leader of the FED ?
The name of the chairman does not matter in my view. These decisions are taken by committee and the importance of the role has diminished since the Greenspan days
Hello, How do you think this balance sheet normalisation will affect other asset classes? Equities for instance.
Thank you, if I ask which stock to invest today, which one would you choose and why please ?
It should at the margin reduce the attractiveness of riskier assets, but we suspect that this will not be immediate because central banks' balance sheets will stay very large for a significant period of time. The focus in terms of global economics at present is a period of synchronised global growth. This is typically positive for risky asset unless inflation were to surprise to the upside meaningfully. I am not allowed to make investment recommendations.
Mia, forget stocks. They only go up! Go to something that go up and down.
What about the IBEX ?
IBEX 30 or is 35? Or 25?
35, regarding the situation in Spain
Same answer as before. This stock market has declined in price because of political risk, both at the central government level and in Catalonia. If a solution to the standoff is found soon, investors will see the potential economic performance in Spain in a more positive light
Invest money in Ibex 25 because it is less than Ibex 35. Difference is 10 profit for you.
I am an expert, soon you will see my bank in the Citi
Thank you for your answer. What do you think happened after Trump election that we didn't expect on the markets ?
Time. He is planning 4+4 years in the job
Markets were surprised by Trump's victory. And were expecting a lot of pro-business measures to be implemented quickly, including rolling back on regulations, as well as a tax reform + fiscal stimulus. Some of this is likely to happen during 2018
More jobs are coming in January 2018. The business will open doors for jobs and work.
Thank you very much. What do you think would be the impact of Brexit on inflation ? on currency ?
You have seen it already. lower sterling and higher inflation
In your opinion, would you say QE has been successful in the US, Europe and Japan?
Do you think that these effects will be more significants once the Brexit is effective ?
In the first two, more so than in the latter. This judgement can only be benchmarked against the counterfactual of no QE.
I mean differences in impacts whether it is soft Brexit and hard Brexit ?
No deal would likely see a further fall in sterling, whereas a transition period of at least two years, with progress on a free trade agreement in the future appears to be priced in
Thank you. What is the relationship between Bitcoin and Q.E please ?
There isn't one, fundamentally
Thank you, last question : What do you think are the top news that are likely to impact the markets except Brexit, FED, ECB ?
Global growth stories, inflation dynamics, geopolitics and more references to the great financial crisis being behind us
Do you personally believe that crypto-currencies have the potential to shape the financial industry of the near future?
Not particularly. A lot of people still like cash, especially in an environment where negative interest might become more normal
How is automation going to change the daily-tasks of bankers within Citi?
Not sure it will fundamentally. Investment banking remains a highly-skilled and high-touch profession that requires personal interactions with clients, not machines
Thank you for your feedback!