US market is on the cusp of a big rally, says Paul Schulte

Dalal Street took cues from global markets to end Friday a percentage point in the green. However, a volatile week saw the Nifty and Sensex slip 1 percent each, but the Nifty bank and Nifty IT outperformed with gains of 1 percent each.

However going ahead, investors are keeping a close eye on China’s big political event – the 20th Party Congress – which starts on Sunday. Xi Jinping is expected to deliver the political report and present the blueprint of key policy priorities for China in the next five years.

Paul Schulte, Founder & Editor at Schulte Research, believes that the US market is on the cusp of a big rally.

“The fixe- income credit people are tremendously worried, much more so than the equity people because they see the credit market and the fixed income market sort of falling apart. We are very close to sort of going over the waterfall in terms of liquidity — certainly in the UK, possibly in US treasuries, Yellen also warned the Fed about the liquidity problem in the treasury market. So the Fed can say inflation is high but we need to pause, we need to look at things. England is America’s closest partner and the British guilt market is on the verge of collapsing. So the Fed is going to have to pull back here and I think there is going to be a very big rally,” Schulte said.