Jeff Rosenberg: There Is A Lot Of Complacency In The Market; The ECB Is Continuing The Financial Repression

Markets are not ready for a change in the message from the Federal Reserves, Jeff Rosenberg, BlackRock’s Chief Investment Strategist for Fixed Income said in an interview with Bloomberg.

“The biggest What if? that we have in front of us is: what if we hear a different message out of the Fed next week?”, he said.

Rosenberg believes that markets are not ready for the Fed changing its message should the labor markets improve. He has also stated that there is “a lot of complacency going on” in the market, pointing to low volatility across the board and a tighter correlation between stocks, bond, currency and commodity markets.

Jeff Rosenberg admits that he was forced to adjust BackRock’s outlook for the bond market more often during the past 6 months due to the constant “flip-flopping” from the Fed. “It hasn’t been a great record for a bond strategist forecast the direction of interest rates”, he has concluded. Nevertheless, Rosenberg insists it is important to pay attention to what the Fed says, as it has a powerful influence over the bond market.

“There is a shortage of bonds”, according to Rosenberg. Despite a decrease in private sector borrowing and a healthier market for municipal bonds, the “government related debt is still at historically large levels of deficit in the United States”. When discussing the situation in Europe, Rosenberg has stated that Mario Draghi and the European Central Bank are continuing the financial repression by providing a “tremendous amount of new money creation”. He argues that, as a result, the prices in Europe are reflecting the effect of central bank actions to a larger extent than the effect of actions of private actors.

“In Europe [...] they are getting further into financial repression. The good news in the US is that we could be exiting financial repression and getting towards more normalization in interest rates”, Rosenberg said.

As a consequence, interest rates will distance themselves from the zero level, according to him. Rosenberg also points to potential risks related to US interest rates rising, while rates in the rest of the world stay close to zero. With the Fed, the Bank of England and ECB acting in a coordinated manner for the past 3-4 years, a decoupling of the Federal Reserves is expected to bring volatility in the currency markets, while the dollar should go higher, according to him.

Disclosure: none.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!