Paul Donovan Managing Director, Global Economics from UBS was the keynote speaker kicking off the second day of the CBOE Risk Management Conference.
Some highlights from his speech –
- He is projecting 3.0% GDP growth for the US in 2014 which would be the first above trend since the financial crisis.
- Donovan projects that tapering will probably begin in January of next year.
- He noted that America is a more cash based society than it was before 2008.
- The impact of tapering will be higher bond yields – global bond yields are highly correlated so this is a global issue.
- The Eurozone is experiencing flat bank lending which will be a drag on economic growth in the future.
- He believes that Japan will continue to print money and expand the Bank of Japan’s balance sheet.
- China is the only one of the BRICS that matters as it is the only one of the four countries that has expanded their share of global GDP.
- There is a People’s Congress meeting in China in November to set policy which could be a game changer depending on the outcome.