Bill Blain, strategist for Mint Partners, joined Zak Mir and Bill Hubard on the Tip TV Finance Show to discuss how the Fed are unlikely to raise rates, as well as the pessimistic view of the world economy, and the bubbles experienced both in China and in the UK housing market.
Data to prevent Yellen and friends raising rates
Blain highlighted that the Fed should be raising rates, however, he is not sure that they will do it next week. He continued that has nothing to do with what the IMF and World Bank have said, and will be purely due to data. Blain outlined the 8 years of distortion through QE in the US and across the world, which as a result has caused all asset classes to be distorted, thus causing bubbles. He urged that we need to remind the markets that there is normalisation following the current signs of growth in both the US, UK and Europe. Blain noted that if rates were raised in the US, there would be a rally in treasury markets and therefore the USD would strengthen. He finished by concluding that within 10 years we will see 2% interest rates in the US.
Always a soft landing from a burst bubble
Blain moved onto China, and outlined the importance of China keeping their economy under control. He noted that a long period of recovery means that there is always a soft landing following a crisis or a burst bubble, and he highlighted the UK housing market. He continued to show how the biggest collapse in the UK housing market is 15% over 6 months, which reversed and recovered over 18 months. He finished by adding that people often expect a crash of around 50%, but the UK has never come anywhere near to that figure.
