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Knuthsen on equities: We can’t go on like this!
With record stock market highs, persistently low interest rates, something’s got to give. That’s the view of Saxo Private Bank’s Chief Investment Officer, Teis Knuthsen. He says growth, notably in the US, looks reasonably solid in 2014 but the huge rise in share values is not sustainable. A healthy expansion would be around eight to ten per cent a year. He also says bond yields need to rise. “It’s never good to have negative real rates of interest”, says Teis.
That said, Janet Yellen, the presumed new boss at the Fed, is promising to keep interest rates low. Teis says we’re likely to see a sharp movement in relative rates that normally triggers a rally in the dollar. However, he points to a “significant” capital outflow from the States. He’s predicting that’s one of the reasons the dollar, while being “undervalued”, will stay relatively low.
02:08 minutes
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