Inflation, interest rates likely to be stickier than markets are pricing, says Goldman's Oppenheimer

AND THE BANK OF ENGLAND AS WELL, ALL AT THAT ECB FORUM IN PORTUGAL, BUT CONDUCTED IN ENGLISH. JOINING US TO REACT, GOLDMAN SACHS CHIEF GLOBAL EQUITIES STRATEGIST, PETER OPPENHEIMER. I KNOW YOU'VE BEEN LISTENING AS WELL, PETER. GIVE ME YOUR TAKE. ANYTHING YOU HEARD THERE THAT WAS OF PARTICULAR INTEREST >> WELL, I THINK THAT, YOU KNOW, THEY WERE KEEN TO DEMONSTRATE THE SEPARATION BETWEEN FISCAL AND MONETARY

POLICY AND HOW IMPORTANT THAT WAS FOR THEM. AND I THINK WERE VERY CLEAR IN THEIR GUIDANCE THAT THEY MUST CONTINUE TO DO WHAT IS NECESSARY TO CONTROL INFLATION, WHICH IS, YOU KNOW, OF COURSE, CONSISTENT WITH WHAT THEY'VE BEEN SAYING RECENTLY AND I THINK BEING SLIGHTLY MORE ON THE HAWKISH SIDE, THE MARKETS HAVE BEEN PRICING. SO WHILE ON THE GOOD SIDE OF THE LEDGER, WE HAVE ECONOMIES

WHICH WE BELIEVE WILL AVOID RECE RECESSIONS, INFLATION RATES ARE LIKELY TO BE STICKIER THAN MARKETS HAVE BEEN PRICING AND THEY'RE REALLY RECOMMITTING THEIR RESOLVE IN THAT DIRECTION. >> THEY SEEM TO COMMITTED TO SLAYING THE DRAGON, SO TO SPEAK, OF INFLATION WHAT DO YOU BELIEVE THAT WILL MEAN IN TERMS OF FUTURE POLICY AND/OR THE IMPACT, OF COURSE, ON WHAT YOU FOLLOW CLOSELY, NAMELY THE ECONOMIES AND MARKETS

OF THESE COUNTRIES IN QUESTION? >> WELL, THE GOOD NEWS IS THAT INFLATION IS COMING DOWN, BUT IT'S COMING DOWN SLOWER THAN I THINK THAT WE WOULD LIKE TO SEE, PARTICULARLY CORE INFLATION. AND FOR US, THAT MEANS INTEREST RATES HAVE GOT FURTHER TO GO BUT PROBABLY STAY HIGHER FOR LONGER THAN THE MARKETS ARE STILL PRICING. SO WILE WE ARE CONFIDENT THAT WE WILL GET SOFT LANDINGS ACROSS

ALL OF THE MAIN ECONOMIES, I THINK THAT, YOU KNOW, RATES ARE GOING TO BE AT A HIGHER LEVEL THROUGH MOST OF THE NEXT FEW MONTHS, INTO THE MIDDLE OF NEXT YEAR, AT LEAST AND THAT REALLY, I THINK, WHEN YOU TRANSLATE IT INTO FINANCIAL MARKETS, YOU KNOW, MEANS THAT THERE IS REALLY A CAP ON RISK ASSETS FROM HERE WE'VE SEEN A BIG RALLY IN EQUITIES, OF COURSE,

OVER RECENTLY MONTHS. AND MUCH OF THAT, I THINK, IS REFLECTING AN INCREASING DEGREE OF CONFIDENCE THAT WE CAN AVOID RECESSIONS AND THAT INFLATION HAS PEAKED. AND WE'RE SEEING SOME INCREASE IN SOME OF THE TAIL RISKS THAT PEOPLE WORRIED ABOUT EARLIER IN THE YEAR, WHETHER IT BE THE U.S. BUDGET OR INDEED, THE REGIONAL BANKING ISSUE. BUT NONETHELESS, THAT RALLY HAS BEEN VERY NARROWLY DRIVEN BY A FEW

COMPANIES. AND THE AVERAGE COMPANY HAS BEEN RELATIVELY FLAT AND WE THINK THAT WILL PROBABLY CONTINUE FOR SOME TIME, IN EQUITY MARKETS >> YEAH, I LIKE THAT POINT IN YOUR LATEST NOTE, PETER, WHERE YOU TALK ABOUT JUST THE NARROWNESS AND I THINK IT'S IMPORTANT TO PUT THAT IN CONTEXT OF, YOU KNOW, OTHER NATIONS, AS WELL, ESPECIALLY, AS WE WATCH THIS ECB FORUM. YOU SAY THAT, YOU KNOW,

THE 15 BIGGEST COMPANIES HAVE DRIVEN 86% RETURN IN THE U.S. YEAR-TO-DATE 100% IN ASIA AND EUROPE'S MARKET BREADTH HAS BEEN SOMEWHAT HEALTHIER. BUT GIVEN KIND OF THE OPTIMISM THAT YOU LAID OUT, DO YOU THINK THAT THIS IS GOING TO CONTINUE THIS KIND OF NARROW MARKET OPTIMISM THROUGHOUT THE REMAINDER OF THE YEAR? OR DO YOU THINK THAT IT DOES KIND OF WIDEN OUT FROM HERE? >> I

THINK IT PROBABLY WILL BROADEN OUT A LITTLE BIT BUT THAT'S MORE IN THE CONTEXT, REALLY, OF STILL RELATIVELY, WHAT WE CALL A FLAT AND FAT MARKET RANGE WHAT WE MEAN BY THAT, POINT-TO-POINT, WE'RE NOT GETTING A LOSS IN APPRECIATION OF INDEX LEVELS FOR THE AVERAGE COMPANY, BUT WE ARE SEEING QUITE A LARGE RANGE, TRADING RANGE, WHICH IS REFLECTING, YOU KNOW, THIS SORT OF TRADE OFTEN FEARS

OR HOPES AROUND PEAKS OF INFLATION IN INTEREST RATES AND TROUGHS IN GROWTH. I DO THINK IT WILL BROADEN OUT, MOSTLY IF WE LOOK AT HISTORICAL PERIODS OF VERY NARROW LEADERSHIP GENERALLY, EQUITIES HAVE HELD UP IN THE 12 MONTHS OR SO THAT HAVE FOLLOWED THOSE VERY NARROW PERIODS OF LEADERSHIP. AND GENERALLY, MORE OFTEN THAN NOT, IT IS BECAUSE YOU'VE SEEN SOME BROADENING OUT OF RETURNS AND THAT'S

WHAT I THINK WIE'LL PROBABLY SEE MOVING FORWARDS BUT AGAIN, I WOULD EMPHASIZE, IF YOU LOOK AT THE MEDIAN COMPANY, IN MOST MARKETS, THERE'S BEEN VERY LITTLE CHANGE IN VALUE THIS YEAR AND WE WOULD EXPECT TO SEE RELATIVELY MODEST RETURNS OVER THE NEXT FEW MONTHS. BEARING IN MIND THAT PROFIT GROWTH IS PRETTY PEDESTRIAN IN MOST MARKETS, A LITTLE BIT BETTER IN JAPAN, I WOULD SAY, THAN THE

U.S. OR EUROPE. WE STILL HAVE HIGH INTEREST RATES, AND THAT'S A HIGHER BAR FOR EQUITIES AND OTH