Neil MacKinnon, Chief Macro Strategist at VTB Capital, shares his observations on the Chinese market bubble, its role in the global deflation, and the interest rate hike uncertainty in the US and UK.
China: Government intervention preventing price discovery
On China, MacKinnon notes that many governments think that they can control the equity market, but it hinders the price discovery process, and creates a false market. Zak Mir says that there is a credibility issue here.
China: The equity bubble and the burst
MacKinnon believes that the government’s policies of cheap money has create a real estate, equity and a credit bubble in the China market which can deflate easily. He further believes that this credit and leverage bubble will result in an economic recession the country, and that the odds of a ‘Made in China’ global recession has increased. There’s a risk of a hard landing.
Watch how MacKinnon explains the role of China in global deflation
On the interest rate scenario in US and UK, MacKinnon believes that the inflation targets will be difficult for the banks to achieve and the central banks are becoming increasingly boxed in.
