Feds Kaplan: Strong dollar is a headwind to US Economy

• Demand for US dollars, driven by flight to quality
• Expects the strong dollar headwind to fade
• Fed should be cautious, patient when raising rates (same words he used last week)
• Don't hike too fast and risk having to reverse course
• Hopeful the unemployment rate will tick down
• Does not expect planned rate hikes to ship treasury yield curve significantly
• it is clear now that China's growth is slowing and will continue to slow
• There are ripple down effects from China
• • Negative rates have number of side effects; remains skeptical.
  • Negative rates can hurt banking, money and commercial paper markets
  • Greater debt in advanced economies creates headwinds
  • Deleveraging has reduced risk big banks post a system
  • Shadow banks more likely now to be at risk than banks
  • Still expects global supply of energy to exceed demand through the end of 2016 (oil trades at $40.21)
  • Expects more bankruptcies and restructuring in oil/gas industry.