You're watching...
Wells Fargo Fixed Income Strategist Brian Rehling on how Federal Reserve stimulus impacts the markets.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
The sound made around the world from central banks they are pumping more money into the system as concern over slowing global growth does continue to mount.
And we have a strategists who says investors will be left dealing with the consequences for years to -- joining us now.
Bryan railing Wells Fargo chief fixed income strategist.
Brian good to see -- first of all we gotta talk about -- foster's comments today the Fed.
President from Philadelphia.
He was essentially.
Poured cold water over QE through is just gonna have a lasting effect on the markets his comments.
I don't -- I'm the last of the fact that mean Bernanke -- clearly control.
The FOMC and -- is the voting bloc on his side so.
But it is an -- where -- is and I've never seen a split is out.
Out in -- in front usually people have their disagreements behind closed doors.
-- -- We're -- more vocal.
On the on the objections to a quantitative easing and Bernanke's policies that's for sure OK so what let's let me just push back on you here.
-- sit here and rail against the Fed all we want but we are also business network try to make people money and the trade is what it is how do you feel what Bryant and how to people make money office.
Obviously they have to stay on their toes and watch because it's a very fluid situation but.
What is your focus and what is your thought right now -- it comes to investing.
You know my take is you know over the next twelve to eighteen months that you know the Fed is going to be pumping out liquidity into the markets so risk base assets are poised to do well -- -- see a pullback.
-- take advantage I think equities equities will do well within the fixed income markets.
The credit markets I think will continue to outperform.
The government markets.
Now Brian it is true it is true that the housing market is improved somewhat but -- I'm just wondering how much the Fed had to do without if you if you lower interest rates.
Our a couple of tenths of a -- of a percent which is what has been happening over the past couple months.
Does that really motivate people to go out and buy new properties and and borrow money for for new projects and expansion.
Did you know I think if you look back I think QE1 and QE2 had a bigger impact exact I mean ten -- interest rates now are below where they were in the depths of the financial crisis so they did have a material impact bringing interest rates down and QE1 QE2.
Q we -- QE3 I think is debatable whether it's gonna have much of much of an impact but nonetheless they are right they're gonna go full steam ahead.
-- in fixed income land is their opportunity that you see right now Brian.
You know we continue to focus on the credit markets so whether it's corporates high yield.
The one thing I would caution of course in this very low interest rate environment you know you don't want to lock in that fixed.
Income stream for a significant numbered years so definitely wanna do it -- -- shot in the intermediate shorter term threats -- -- -- Thirty year treasuries kind of thing.
Exactly how about municipal bonds everybody was freaking out a few months ago after Meredith -- statements which never really panned out that there were going to be all these defaults there there have been a couple of notable ones but not that the widespread defaults -- you Hussein some people went into Moody's.
Did pretty well on that are you still interest and in that market.
Absolutely I think -- still offer value relative to other fixed income instruments obviously overall fixed income.
Has gotten a little expensive but within Munis we don't see the you have the the bankruptcies out in California.
You know turning into a nationwide trend so continue to by the better equality there but still think there's value there for investors -- especially if -- tax rates go up.
Brian good to see you thank you so much Bryan railing as Wells Fargo chief fixed income strategist thanks Brian.
