I appeared on Channel News Asia again this morning at 8:30am SGT, live from their Raffles Place studio. My questions and my responses in the form of brief notes are below:
Q1. Wall Street indices are trading at or near record highs. Is the risk of a correction now greater?
Maybe a little but this is a positive move. Both major US indices have been struggling with resistance at key levels for most of this year. The DJIA around 18,200 and the S&P500 around 2100 and now that both have moved slightly higher might see a shift in sentiment to a more bullish outlook.
Q2. The macro picture is not that great but it’s not a disaster quite yet. Do we need to see some better growth figures?
Absolutely. One of the buzz words this year has been growth and we are seeing plenty of sluggish growth and data from all around the world which is missing expectations.
Q3. US homebuilder sentiment fell in May. So will the Fed wait a little longer to raise rates?
Most likely. At the start of this year, all eyes were on the Fed and when they were going to raise rates in 2015. Throughout this year U.S. economic data has routinely missed expectations and whilst a June rise is still technically a possibility, it is highly unlikely. There wouldn’t much surprise if the first rate wasn’t until next year.
Q4. When the dollar loses, gold wins. So is right now a pretty interesting entry point, if you are a long-term investor for gold?
Maybe not so much. The long term outlook for the US dollar is still quite positive so whilst gold might enjoy a little more appreciation and move above the key $1240 level, the longer term outlook for gold is probably not as optimistic.
Q5. Rising oil prices have also brought investors back to gold. Will higher energy costs spur inflation?
Yes and this may not be such a bad thing. We are concerned about growth across the globe so a little growth and inflation might be a good thing, especially when in some instances we are addressing concerns of deflation.