Markets in a fairy tale scenario; US tech space is close to a bubble: Vincent Mortier, Amundi

economictimes.indiatimes.com:

Vincent Mortier, Group CIO of France's Amundi, Europe's largest asset manager, said the US Federal Reserve may not cut rates in March as the market is expecting. In an interview with Nishanth Vasudevan, Mortier, who oversees global assets under management worth over $2 trillion, spoke on a range of topics. Edited excerpts:

The market is expecting the US Fed to cut rates as early as March. What are your thoughts?

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We expect it to start in June. Even though the market is pricing inflation at 2% or below forever, we think the data will be higher. Inflation will be 2.5-3% in the coming quarters and years. If it's at 2.5-3%, the Fed won't be alarmed. The Fed will cut in June, not because of inflation, but because of the economy, which will start to soften. It will be difficult for the US to continue to have such a deficit without any consequences on the cost of debt. That's why there is confusion about whether there will be a soft or hard landing. There will be a landing for sure. So, we expect the Fed to cut by 150 bps this year, which is quite large. The main reason would be to push up the US economy in an election year. Of course, the Fed will never say it but I think it will try to support the economic cycle at least until the election in November.

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So, if the Fed does not cut rates in March, how will markets react because it has rallied on such hopes?
The market has been in a fairy tale