The oil fund manager believes that those optimistic about lowering interest rates are underestimating several factors. It also doesn't ignore the fact that there will be AI correction.
-We are not very optimistic when it comes to returns for this year, nor in the next two years.
This is what Oil Fund Manager Nikolai Tangen says Interview with Bloomberg In Davos on Monday during the annual conference of the World Economic Forum.
Top managers, directors, politicians and other influential figures gather there every year to discuss forecasts for the coming year.
Tangen is attending the Davos conference to represent the oil fund and gain inspiration himself.
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In an interview with Bloomberg, he gave an interest rate forecast that is unlikely to please Norwegians with large mortgages.
– When it comes to interest rates internationally, I don't expect them to fall as quickly as many expect, says Tangen.
– We'll be careful about cutting
He points to underlying inflationary pressures and the prospect of strong wage growth as potential factors holding the party back.
– This could lead to a spiral effect in inflation in the future. In addition to that, you also have negative climate influences on pricing, you have geopolitics, you have trade routes. There are many things, and it is just an unfortunate cocktail, the oil fund manager says in the interview.
– I think central banks will be very cautious about lowering interest rates, because they have been very slow in raising them, he says.
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The market is now pricing in six small US interest rate cuts by the end of 2024, which equates to total cuts of 1.5 percentage points. As for the euro zone, the market is almost fully factoring in six interest rate cuts this year.
The US central bank indicated during its December interest rate meeting that there will be three interest rate cuts next year. For its part, the European Central Bank has been reticent to talk about interest rate cuts.
Here at home, Norges Bank has only indicated that there will be one rate cut in 2024, and that it will only happen in the autumn. Meanwhile, the market is already pricing in discounts for the summer.
-The AI correction would not have surprised me
During the interview, the oil fund manager was also asked about the meteoric rise that AI-related companies have seen in the past year, and how investors should navigate through 2024.
– It's a very difficult question. Because how much are they actually priced at?
-We have the dot-com bubble, with a huge rise in Internet stocks. Did it live up to expectations? Yes, but after ten years. Meanwhile, stock prices fell. So I wouldn't be surprised if we see a correction in AI-related companies. That could easily happen, but that doesn't mean AI isn't real, he speculates.
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