Mohamed A. El-Erian
@elerianm
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President, Queens' College, Cambridge Uni. Allianz Advisor. Gramercy Chair. Wharton Prof. Lauder Sr Fellow. Chair of UnderArmour Board. Former Pimco CEO/co-CIO.
Joined July 2011
Hello, I hope this finds you well. With yesterday’s publication of the candidate list for the Chancellor of the University of Cambridge election, I wanted to take a moment to express my sincere gratitude to all my supporters. I am profoundly thankful for the backing and
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And just like that, the yield on the 10-year US government bond, a global benchmark, is back at 4%. #economy #markets #investing #investors
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Today, it is 102 years since my dad was born. While he passed suddenly 42 years ago, his inspiration and influence are as strong today as they were then. I am eternally grateful to him for his love, his encouragement, his kindness, his support, and the example he set for us all.
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An independent #FederalReserve is critical to the well-being of the US #economy. Having said that, it is getting harder to justify such independence when four big operational errors (of analysis, forecasts, actions and communication) are accompanied by a lack of accountability.
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Judging from the images on the news of large crowds in public spaces, the next few weeks’ infection/hospitalization numbers out of some US states will shed light on the following: either we are re-opening with insufficient health safeguards or the lockdown was a big overreaction.
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If you have a few minutes, may I please ask you to read this (link below)?.This is only the second time since I've been tweeting that I make such an ask. and do so because,by being informed about what's ahead, we stand a better chance of responding better.
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What insights does Game Theory offer on the U.S. tariff policy approach? I can think of at least two:.1. Given the relative strength of the U.S. and the relative weakness of many other countries—both cyclically and structurally—the approach promises gains for America in the.
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It is so sad to hear of #ArtCashin's passing. A legend on Wall Street, Art was the wisest of the wise on the New York Stock Exchange floor. From what I experienced and observed on several occasions, he always treated people with kindness and respect. May he rest in peace.
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Awful US inflation data.Headline at 9.1%, well above the median forecast of 8.8% and highest since 1991.Core also higher-than-expected. Details appear equally worrisome.Bottom line: Further blow to economic and social well-being. Highlights Fed’s worst policy mistakes in decades.
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Up to an hour ago, there was a debate on what would convince the US Administration to opt for some type of pause on tariffs. Would it be Congress, the President's advisors, business leaders, the legal system, markets, or something else?.We got the answer today:.It's the.
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I am stunned by how quickly the market narrative has changed about what the Federal Reserve should do. The widespread comfort of just a few days ago about the Fed having time to wait until September to cut rates by 25 bps is being replaced by more analysts and economists calling.
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Yesterday was far from a “normal” Fed Day:.Wednesday saw the largest surge in 10-year yields on a Fed Day since 2013 and the biggest drop in the S&P index for over 30 years. It has led to heated discussions among analysts as to the “why” and the “so what.”.I am currently working
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With today’s move up, the yield on 10-year US government bonds has now risen by over 70 basis points since the #FederalReserve cut rates by 50 bps on September 18. (For background, this from earlier this week:.).#economy #markets #econtwitter
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A most concerning chart, if not the most concerning — economically and socially. #economy #food #inequality #inflation
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The cover of The Economist. #economy #markets #centralbanks #fed #federalreserve @TheEconomist #EconTwitter
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Having lost control of the narrative on inequality and inflation, the #Fed faces further damage to its reputation due to their interaction:.The most vulnerable segments of our society are being hit hard by #inflation and also face the risk of an income shock due to a policy error.
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May I please ask you a favor?.May we all make a point of thanking those who continue to show up to work and allow various services and production processes to continue?.From our stores and banks to factories and the like, they are taking higher personal health risks for our sake,.
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What if it's not just the risk of "zombie companies" eroding the productivity and dynamism of the economy. but also zombie #markets mis-pricing risk/mis-allocating capital due to heavy official intervention?.There are better ways to help people and minimize future hits to growth.
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Taken at face value, this is a "blowout" US jobs report -- impressive job creation (254,000, a lower unemployment rate (4.1%), and buoyant monthly wage growth (0.4%). All are notably better than the consensus forecasts. On a standalone basis, this implies. Not just a solid but a.
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How late is the #Fed? Very:.Having misunderstood the inflation dynamic, it eroded its credibility.Having missed a wide-open window last year to adjust policies when economic growth was on an upswing, it no longer has good policy options.It has lost control of its policy narrative.
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On this day, December 12th, we lost our dad to a heart attack. It was 42 years ago, and yet it still feels like yesterday. I have been, remain, and will always be profoundly thankful to him for … . All that he sacrificed to support our education,. The value system he cherished
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This sort of yield volatility is not normal for a security — the US 10 year government bond — that serves as an important benchmark for the financial system, domestically and beyond. It is also not desirable as it undermines constructive financial intermediation, harms the
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Message is clear from the negative US GDP print (-0.9%) and unfavorable miss on jobless claims:.The US #economy is slowing at a significant rate. Add to that the 8.7% price change in today's data and the bottom line is clear:.Deepening stagflation and flashing red #recession risk.
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Can you tell I was taken totally out of my comfort zone! I tried, and with no technical support. The family ate it all. Talk about being polite and supportive!!
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.@WarrenBuffet on.Why he's not buying stocks in size: sensitivity to tail events and the '08 reminder "we don't see all the problems the first day.".On whether others should buy now: Only if you expect to hold for a long time and are financially and psychologically ready to do so.
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The yield on the 10 year US government bond is flirting again with the 4.60% level. It would not surprise me if this yield traded in the 4.75-5.00% range for a good part of 2025. #markets #investing #investors
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Having gone through the data again this weekend, I feel even more strongly that 50 bps would have been better last week (reasons detailed in my Jan 26th @opinion post). I hope dearly the Fed hasn't, for the 3rd time in this hiking cycle, missed a window for timely policy actions.
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Further to earlier tweets:.Virtually everyone at this high-level Swiss press conference--government officials, regulator, central bank governor, and executives of the two banks--blamed the US banking sector turmoil for being the catalyst for the financial turmoil in #Switzerland.
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Brazilian local markets are experiencing one of those old-fashion EM overshoots where a fundamental trigger combines with bad technicals to cause a self-reinforcing selloff. The race now is between circuit breakers on the one hand, and bad technicals contaminating fundamentals.
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A year ago, the #Fed was confident about #inflation, asserting that it would be back around 2% by the end of 2021. Today, inflation is 3-4 times that level and likely to remain high into 2023. Today's Fed, it is confident about a "softish landing.".Let's hope so. A lot at stake.
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Look what popped up!.In May 2013, after my 10-year-old daughter meticulously listed 22 things I had missed during that school year—from her first day of classes to her inaugural soccer match—she got her yearbook, pointed to a specific photo, and simply said, “Even when you are
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My daughter just sent me this from 17 years ago!.Looks like a late-night or early-morning joint session. Somehow, and despite the specialized keyboard, I doubt we were analyzing Bloomberg data!.I suspect we were either looking at family photos or reading a picture book online!
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I’m repeatedly being asked “how inflationary will tariffs be?”.Unlike others who have proclaimed either “very” or “not at all,” I am quick to say we don’t know for sure. This is not because I don’t want to commit. It’s because there are several factors in play that translate not.
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Keep an eye on this one — the US 10-year yield. #economy #markets #EconTwitter #investing #investors
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Well, that didn’t take long. Once again, Fed officials seem forced to walk back public comments that moved markets in a major way. It remains to be seen whether this will succeed given the extent to which Wednesday’s “Powell Pivot” has unleashed several market technicals.
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A stunning US jobs report highlighting the strength of the labor market and its complexities. Job rose by 517,000 for Jan compared to the consensus forecast of 189,000; the unemployment rate fell to a 53-year low of 3.4% (3.8%). The puzzle: Wage growth came in as expected (0.3%).
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I’m getting lots of questions this morning about why Bitcoin is trading above $100,000, up sharply from its mid-October price level of $66,000. Here is one way to think about this:.As I have noted before, one of the big changes taking place in the US post-election is the
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Moodys on why it just changed the outlook on the Aaa credit rating of the US from stable to negative. @MoodysInvSvc #economy #markets #EconTwitter
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"In terms of total returns, this is the biggest bond market rout in 150 years. Last year was in fact US bond investors’ worst year since 1871, with a total return of minus 15.7%, even worse than the annus horribilis of 2009. For 2023, the year-to-date return has been almost minus.
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Looking at Adam Smith who many regard as the “father of economics.”
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One of Adam Grant’s posts from this year. Thank you, Adam, for all your wisdom and guidance. #thank #thankful @AdamMGrant
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Extremely sad and tragic news out of Japan. The assassination of Shinzo Abe, Japan's former and longest-serving Prime Minister, robs the country and globe of a world-class leader. He leaves a legacy of bold policies, courage, and dedication to the welfare of his people.May he RIP
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This weekend, the happiest of my life, I was fully in parent mode as we celebrated my daughter’s graduation from the University of Pennsylvania. What a wonderful opportunity to congratulate her-and all the graduates-on their incredible accomplishments, dedication, and hard work.
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The yield on the 10-year US government bond is currently trading above 4.70%. Simply put:.Last year was about #markets adjusting to higher rates. This year is about markets adjusting to rates staying high for longer. The process of market adjustment is ongoing while that of the
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Some are wondering why we haven't had more of a bounce in US equities after the partial rollback of tariffs on Canada and Mexico. I suspect part of the answer lies in the extent to which companies and households value the predictability and clarity of policies. As one CEO put it.
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.#Fed's balance sheet continues to increase, now very close to $9 trillion. It's very hard, if not impossible, to justify the #Fed pumping yet more #liquidity into the system via asset purchases. Officials should announce tomorrow an immediate end to #QE.
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As the dust settles, the economy and markets are left with the reality of a 100 basis points move in the Fed-sensitive yield on the 2-year US government bond over the last four weeks. To be clear, this is in no way “normal,” especially given that there hasn’t been some massive.
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Given how massively under-exposed stocks I was going into this selloff, I dipped a toe in this afternoon via a small handful of high-beta names.Do I think the selling is over? I suspect not though, of course, I don't know any more than others.I do sense some trading opportunities.
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This just popped up on my phone: A “daughter-father dance” from many, many years ago. What parents will do for their kids!!! 😀
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This, from @BBCNews about food prices in the #UK, is an important reminder that #inflation is not about abstract numbers. It is a persistent real-world phenomenon that consistently erodes households' purchasing power and hits particularly hard the most vulnerable segments of
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It is still very early to draw conclusions for what's ahead in markets from activity in futures. Having said that, the initial partial indicators are unsettling:.US stock futures are down another 3-4%, 10-year yields are 10 bps lower, and oil is down another 3%. In other words,.
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.#Stocks just took a leg up on #FederalReserve Chair Jay #Powell characterizing financial conditions as having tightened quite a bit in the last year. (Not sure which index he is using. The most widely cited ones show overall financial conditions as loose as they were a year ago).
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While on China, do you recall the post from a few weeks ago about the implosion of the yield on Chinese government (domestic) bonds and how this fuels what could become self-fulfilling worries about the Japanification of the economy?.Well, the phenomenon has intensified with the
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I remember my amazing dad on this #FathersDay.Kind, caring and dedicated, he taught us the importance of education, respecting others, hard work, and giving back. He passed 40 years ago, yet his inspiration and guidance are with us every day.A huge thanks to a very special father
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Hard to believe but the yield on the 10-year US government bond, a global benchmark, is back at the same level that it started 2023!.This at a time when the consensus expectations for US #growth is very different than a year ago; and there is greater sensitivity to bond issuance
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From the New York Times: “Just two decades ago, China had little capacity to make cars, and owning one was considered novel. Today, China produces and exports more cars than any other country in the world.”. #economy #china #econtwitter @nytimes
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I'm often intrigued by questions from strangers. Yesterday on the train, for example, someone recognized me as "that economist" and asked why "America, as the most powerful economy, doesn't run balanced trade or surpluses with all other countries?"."Good question," I replied,.
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Some of the calculations on Twitter exaggerate the risks facing the banking system. While there are fragilities inherent to the US banking setup, they are containable via timely policy measures.The risk is that such calculations fuel undue anxiety, amplifying systemic instability.
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At 5.20%, the yield on the US 2-year is at a level not seen since mid 2006. #economy #markets #econtwitter #bonds
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Analytically, think of today's equity losses as a new phase and not just a continuation of the earlier selloff.At first, it was about rising interest rates and tightening financial conditions.Now it's also about growth/earnings worries as inflation erodes living standards/profits
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Per the @FT: “US companies are defaulting on junk loans at the fastest rate in four years, as they struggle to refinance a wave of cheap borrowing that followed the Covid pandemic.”. This is not about weak demand. Rather, it’s the consequence of excessive borrowing by companies,
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Goldman joins a small but growing group worried that inflation may not come down as fast as we would all hope for, and is needed for economic well-being. What is also interesting is that, within this group, almost everyone automatically assumes that this higher #inflation will be
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From Torsten Slok, Apollo's Chief Economist:.•"[US] Consumer sentiment is declining rapidly both for households making more than $100,000 and less than $100,000 (see the first chart). •Consumer worries about losing their jobs are at levels normally seen during recessions (see
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Another #inflation number that's above consensus expectation:. #Germany's PPI rose 25% in January, the highest since 1949. While energy prices played an important role. "Even excluding energy, producer prices were up 12 per cent, pointing to broadbased producer inflation" @FT
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I've been asked repeatedly why the US administration’s approval rating on the economy remains so low among voters even though the US economy has consistently outperformed expectations in terms of growth and jobs. The quick one-word answer is, of course, inflation – and in three.
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As many of you know, I have felt for a few months now that the 2 year yield was the best indicator of what broader financial markets would do and why. Today’s comments by #FederalReserve Chair Powell pushed this yield to over 5% … 1 of 2
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Another day, another record for the price of gold. #markets #economy #gold #investing #investors @markets
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It’s wonderful to be able to end the week with such a stunning southern Californian evening . especially after such a highly uncertain and unsettling week for us all. Wishing you a restful weekend. #weekend #sunset #socal #california
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This @WSJ chart captures well why the general public has yet to appreciate the fall in the US inflation rate from over 9% two years ago to just under 3%. #economy #inflation #econtwitter
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Our own version of “moral hazard” deepens: Our pup now expects the water to be brought to her after the walk!
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As next week's US CPI #inflation print may get very close to 9%, some will be quick to point out that this measure is backward-looking. Yes. but it.Captures the pain that many are feeling, particularly the less fortunate segments of society; and.Influences inflation expectations.
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Two more of the joys I have found in working from home: .Our wonderful pup kept me company under the desk while I was working . and next to me while I took a nap. (To be more precise: I decided to be next to her for the nap, forgoing the sofa!). #dogs #pups #workingfromhome
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Bloomberg on China’s negative inflation data — not just PPI, which has been negative for a while, but also core and headline CPI. These numbers will amplify concerns about the risk of a self-reinforcing process of “Japanification” of the Chinese economy. #economy #inflation
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Wondering how a small miss on the US #inflation numbers can result in such a spike in yields on US government #bonds (2- and 10-year below)?. A lot of it has to do with the extent to which #markets had embraced, subject to limited critical thinking, the narrative of a very soft
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