Taps Coogan – May 26th, 2022

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Mohamed El-Erian, Allianz Chief Economic Advisor, recently spoke with CNBC to warn that he doesn’t see the Fed stepping into to help markets anytime soon and reiterating that the problems that face markets and the global economy aren’t going to go away for years.

 

Some excerpts from Mohamed El-Erian:

“The big question for me is why haven’t we had more of a bounce in what has been a relentless period of seven to eight weeks of weekly declines and I think the answer is because we continue to get bad news… We need to get these worries out of the way before we can establish a good bottom and get a sustainable bounce.”

“Even if it were to concern the Fed, and it doesn’t because market functioning has been fine… the Fed is highly constrained. The inflation isn’t going to go away anytime soon and the Fed isn’t going to go back to its old habit of… having a Fed Put, of injecting liquidity… The Fed must keep an eye on the fact that the 60-40 portfolios have done really badly and that’s because the safe haven characteristic of government bonds were totally distorted by Fed interventions…”

“You are seeing a global economy that is being rewired… Forget about the ‘Just in Time’ …I think we’ve entered a period where the multi-nationals in particular are going to have to rethink how they approach the global economy. This is no longer a world of ever deeper trade and financial integration…”

There is more to the interview, so enjoy it above.

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