Globe

Interest rate increases will return to the agenda of the US Federal Reserve soon as the recovery there strengthens, according to Chief Investment Officer Haig Bathgate.

US markets decelerated last week amid fears that growth may be cooling. However, any concern over the health of the world's biggest economy is a temporary blip, driven by depressed profitability for some exporting companies on the back of a stronger dollar. More important is the lower oil price, which will boost consumer spending and put the recovery on a more robust footing. Fed Chairwoman Janet Yellen will be watching out for key labour figures due this week to help with deliberations over any rate increase.

Haig, speaking on BBC Radio's Good Morning Scotland, continued by stating that, in Europe, markets have been jittery on fears that the new, and inexperienced, Greek government may blunder in its negotiations and inadvertently lead Greece out of the euro. Still, new plans announced by the country's leaders last week to shore up Greece's finances should eventually lead to an agreement with creditors and help the country access the bailout funds its needs.

 

GILLIAN MARLES

Business news now and it's yet another crucial day for Greece. Laura Maciver is here with more on this and the rest of the market news - Laura.

LAURA MACIVER, Business Correspondent

Hello again. Yes, Greece's creditors are studying new reform plans put forward by Prime Minister Alexis Tsipras's government in a bid to secure further bail-out funds. The plans were submitted on Friday night and Greece says they will raise 3 billion euros in state revenues for the cash-strapped country. Now, on the markets European stocks aimed ended the week fairly flat, there were further falls on the FTSE 100, which ended down almost half of one percent. In the States the Dow Jones ended the day up a touch, although last week was one of the worst for the index so far this year. Haig Bathgate, from Turcan Connell, is our markets guest this morning and he's in Edinburgh for us. Good morning, Haig.

HAIG BATHGATE, Turcan Connell

Good morning, Laura.

LAURA MACIVER

So Greece first, there can be no doubt here that Greece will get further funds, has this played out with how the Prime Minister and voters imagined, though, do you think?

HAIG BATHGATE

No, I think it's been a fairly long-winded process, I mean a degree of predictability that this might tumble on a little bit. As we've discussed before, the politicians are playing to their local electorates, so there's no incentive for them to come to a resolution very quickly. The thing that, I think, the markets are getting slightly jumpy about here is obviously Alexis Tsipras's government is very inexperienced and they are worried that they might make a blunder and actually through some form and unintendedly actually negotiate their exit from the Eurozone, but they seem to have finally put forward a reasonable plan to increase taxes and curtail spending and we would hope that that would be approved relatively soon.

LAURA MACIVER

And looking to the markets last week, first in the States, it was a poor week, as I said, for the stock market last week and some concern about the economy cooling, this week we get labour figures - how important are they?

HAIG BATHGATE

The labour figures are very important, they've been highlighted by Janet Yellen, who obviously holds the hands in terms of making decisions on interest rates, and she's highlighted that as being a key area of interest. The US is in quite an interesting position at the moment - you've got the economy, which is actually performing quite well, however we're starting to see company profitability being impacted by the strong dollar and also at the margin increasing wages in the US, now that the consumer is starting to recover. We think it's a temporary blip, we think that the fall in oil price is actually going to be quite a positive for the US consumer, so we would expect the figures to become more robust and interest rate increases to come back onto the agenda very soon.

This content was generated prior to Turcan Connell Asset Management Limited operating as Tcam.

We’re always happy to discuss things further.
Contact Us
for more information.