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Central banks are the biggest marker-movers, says Oppenheimer CIO

Markets reacting to THIS

U.S. stock markets are recovering from initial Brexit shocks, nearing pre-vote levels this week. But keep an eye on central banks moves for signs of where markets will go, says Oppenheimer Funds Chief Investment Officer Krishna Memani.

"What the markets are reacting to more than anything else is expectation that the central banks are going to be providing a high level of policy support," Memani told CNBC's "Squawk on the Street " Thursday.

Central banks have reacted to the possibility of lower global growth post-Brexit with more easing. The Bank of England for example, announced more stimulus following the U.K.'s vote to leave the EU. These programs will help keep markets liquid, Memani said, but haven't historically been a silver bullet.

"Central banks have been successful in supporting asset classes but perhaps not getting growth going to the level they want it to go," Memani said.

Global central banks are using the same strategies adopted in the years following the financial crisis to boost growth. As a result, Memani said investors have little choice when it comes to how to play the markets, other than "riding it out" the low-rate environment.

"That's what's been working for the last seven years and that's how it'll work for the next few, he said. "I think that's the choice you have to make from a valuation standpoint: Which is the most attractive part of different assets?"

Memami recommended moving towards credit instead of stocks, since "equity valuations may be somewhat high."

Investors have turned to U.S. sovereign debt as a safe haven in the aftermath of a Brexit, sending yields to record lows. The yield on the 10-year Treasury note hit 1.3868 percent. Thirty-year bond yields also hit a fresh low of 2.098 percent, before trading higher at 2.16 percent Wednesday. Yields move inversely with bond prices.

Goldman's Asia play

Investors with money to put to work might be better off turning to stocks though, said Timothy Moe, head of Asia macro research and chief Asia equity strategist at Goldman Sachs.

"There's a huge appetite for income," Moe said. "We've identified a list of companies that have a 5.5 percent dividend yield which in today's world is pretty attractive, particularly if they're covered by good cash flow."

China was a main global growth concern in 2016, before the reality of Brexit hit. Moe and his team at Goldman Sachs changed their strategy in the Asia after the Brexit, citing low profit growth through 2018.

Easing from the Chinese central bank hasn't typically ended in a positive market reaction. The People's Bank of China, PBOC, resumed easing cycles in January, and the PBOC shocked markets last August by devaluing the yuan.

But Moe said the PBOC has been doing a "much better job" with communicating moves to the market instead of "one-off jumps that flip people out."

"There's been a more calm and guided fashion to things so volatility is low even though prices have gone to new highs," Moe said. "There has been an adaptive response, and they've learned communication with the market is indeed important."

Policy-makers in Japan are still in a bit of a bind, Moe said. Previous moves to negative interest rates did not have the intended effect.

"The expected response it was supposed to illicit did not happen because you have an older demographic," Moe said. "When you charge them for putting money in the bank with negative interest rates you don't get people to spend more, you just get them to hoard more."

"Abenomics", named after Prime Minister Shinzo Abe hasn't quite worked the way Japan's Central Bank expected, Moe said.

"Having interest rates going even further negative wouldn't be palliative."