More volatility likely in 2018: Geoff Lewis, Manulife AM

Talking to ET Now, Geoff Lewis, Manulife AM, says that with Jerome Powell as Fed chair, markets are likely to assume that we will see a very gradual monetary policy in the US and that nothing much has changed.

Edited excerpts:


Do you think that the kind of an outperformance by the US markets is likely to continue even though we know that Jerome Powell will pretty much do the same that Janet Yellen did so far?

As far as Jerome Powell and the markets are concerned, it is a plus that he is seen as a centrist. His voting history was pretty much in line with that since 2012 when he was appointed. So the markets are likely to assume that we will see a very gradual monetary policy in the US under Jerome Powell and nothing really much has changed on that score.

It is reassuring and it is the safety choice compared to say someone who is less known to the markets or someone who does not have that experience, like John Taylor.

From a market standpoint because markets are roaring away and are in a buoyant state, do you believe that the Fed hiking rates perhaps would be quicker than anticipated and with the Bank of England also blinking on rate normalisation, slowly and steadily there would be pressure coming in on liquidity? Come 2018, that that would be a challenge that could derail this ever so buoyant sentiment on the street?

Well our view is that the central banks will move very slowly and cautiously. We do not see the Fed changing very much from the rates already set. The ECB and Bank of Japan are still easing, so we think that the global liquidity situation is not going to deteriorate significantly as far as markets are concerned. Probably we are going to see more volatility in 2018 than we have seen this year.