Over the weekend, there was an interesting conversation between the current Fed Chairman Jerome Powell and two ex-Fed Chairpersons Janet Yellen and Ben Bernanke. In the meeting, Powell spoke about what he makes of the US economy and how he plans to adjust the monetary policy.

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Analysing the Fed statements, James Glassman, senior economist at JP Morgan said, “We have got very strong job news, the economy got lot of momentum to generate this kind of job news then why has the US Fed become cautious – it is because the inflation trends have been little more moderate. So, I think it was appropriate for the Chairman to say they are going to be more open minded.”

"However, this idea that has been percolating in the market that round the corner, the US maybe looking at recession risk, that makes no sense because monetary policy all around the world are still more accommodative and the US economy is growing faster than it long run trend and the Fed policy is still accommodative, the real Fed funds rate is barely above zero," Glassman said in an interview with CNBC-TV18.

Glassman is of the view that there is very little danger of US slipping into recession. According to him, the equity markets are being driven by wrong idea that the US was on the verge of recession.

When asked where the smart money would go – would it go to China after the warning Apple gave or would it chase developed markets after the jobs report, he said, "The smart money will be rethinking this whole idea that the global economy is slowing down and my guess it want take much to get the risk on trade back in play again. So, smart money would be back into equities."

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