In the interview with PKU Financial Review, Chief Investment Officer of Bleakley Advisory Group, Peter Boockvar states that, excessive monetary easing is the primary factor of high inflation. He also shows confidence on the trend of Asian stock market in the coming years, as the price is relative low and the confidence on long-term investment is necessary.
PKU Financial Review: What do you think of the high inflation in the US? Is it the result of a long period of low interest rates and quantitative easing, or is it the result of a global supply chain crisis?
Peter Boockvar: High inflation is a combination of factors. On the demand side, excessive government spending financed by excessive monetary easing, including QE, put a lot of money on people’s pockets that they then spent mostly on goods. On the supply side, covid disrupted all of the supply chains that just couldn’t keep up with the flood of demand. Also, high housing prices driven by easy money has also been a major factor with inflation.
PKU Financial Review: Do you think that when the Fed keeps raising interest rates, it will lead to a stronger dollar than ever before? How will it affect stock markets in the US and around the world? Are Asian currencies, such as the Japanese yen and the Chinese RMB, entering a phase of collapse?
Peter Boockvar: We’ve already seen a sharp rally in the dollar in response to tighter monetary policy but I don’t think there is much more room to run on that. The yen is challenged by the persistent easing by the BoJ who is not yet ready to get off yield curve control. The yuan has weakened with other foreign currencies vs the dollar but in isolation, won’t really rally until China shifts from its strict covid policy.
PKU Financial Review: You mentioned that the US is no way avoiding a recession and we are in the second stage of bear market stages. Do you think the US is likely to fall into financial crisis? And how serious it will be?
Peter Boockvar: I don’t think we’ll see a financial crisis like we did in 2008 but a recession will still hurt.
PKU Financial Review: In China and many other countries these days, people don’t know what to invest. Since the fund and stock market are very volatile and depressed. Where do you think the investment opportunities are lying?
Peter Boockvar: Inventors in stocks always have to tolerate volatility. Make sure to have a long term time horizon if one is going to invest in the stock market. I’m actually bullish on Asian stock markets for the coming years as they are inexpensive.
Peter Boockvar, Chief Investment Officer of Bleakley Advisory Group
* This article has been initially published in PKU Financial Review.
