The recent choppiness in U.S. markets due to Chinese growth concerns and Federal Reserve rate hike uncertainty may indeed flare up again. Nevertheless, overall volatility should come down over the coming months while equity prices should move up, said Karin Kimbrough, head of macro and economic policy at Merrill Lynch. ‘We are looking at this really as a cyclical bear market amidst a longer, secular bull market,’ said Kimbrough. ‘We should see improvement going ahead as we see U.S. growth improve next year.’ The Federal Reserve prolonged the market’s unease last week by deciding against a rate hike due to international concerns, primarily economic insecurity in China. Kimbrough said Merrill Lynch’s economist Ethan Harris is calling the Fed’s decision to keep rates unchanged a ‘tactical delay’ and is looking for a December liftoff. Kimbrough added that like Fed Chief Janet Yellen, she too is ‘watching China carefully.’ ‘China is trying to transition its economy from being export oriented to domestic demand oriented and that’s going to take a long time. And they’ve got a lot of aspects of their market and their economy that they are trying to manage at that time,’ said Kimbrough. ‘Looking ahead I think it’s going to be more volatility for all of us.’
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