a
a
HomeTrading NewsEl-Erian Warns ‘Economic Accident’ Would Precede Any Central Bank Pivot

El-Erian Warns ‘Economic Accident’ Would Precede Any Central Bank Pivot

S&P 500

3,585.62

-54.85(-1.51%)

 

Dow 30

28,725.51

-500.10(-1.71%)

 

Nasdaq

10,575.62

-161.89(-1.51%)

 

Russell 2000

1,664.72

-10.21(-0.61%)

 

Crude Oil

79.74

-1.49(-1.83%)

 

Gold

1,668.30

-0.30(-0.02%)

 

Silver

19.01

+0.30(+1.62%)

 

EUR/USD

0.9801

-0.0018(-0.19%)

 

10-Yr Bond

3.8040

+0.0570(+1.52%)

 

GBP/USD

1.1166

+0.0043(+0.38%)

 

USD/JPY

144.7290

+0.2860(+0.20%)

 

BTC-USD

19,401.86

-92.56(-0.47%)

 

CMC Crypto 200

443.49

+0.06(+0.01%)

 

FTSE 100

6,893.81

+12.22(+0.18%)

 

Nikkei 225

25,937.21

-484.84(-1.83%)

 

El-Erian Warns ‘Economic Accident’ Would Precede Any Central Bank Pivot

(Bloomberg) — Mohamed El-Erian has a cautionary word for anyone anticipating an end to interest-rate increases from the Federal Reserve and other central banks.

Most Read from Bloomberg

MacKenzie Scott Files for Divorce From Science Teacher Husband

Top Apple Executive Is Leaving After Making Crude Remarks in TikTok Video

Meta to Cut Headcount for First Time, Slash Budgets Across Teams

Marjorie Taylor Greene’s Husband Files for Divorce After 27 Years

Putin Says Annexation Is Forever, Defends Ukraine Land Grab

“All of you who are looking for a pivot, be careful what you wish for,” the chief economic adviser at Allianz SE and Gramercy Funds chairman told Bloomberg Television’s The Open on Friday. “This pivot only happens if you have an economic accident or a financial accident. And the journey to an economic accident or a financial accident is a very painful journey.”

The closely followed investor and strategist points to the upheaval in markets this past week, highlighted by the Bank of England intervening to stop a meltdown in gilts after a UK tax cut proposal, as a sign of economic fragility.

“This week has told us a lot about the transitions going on,” said El-Erian, who is also president of Queens College, Cambridge and a Bloomberg Opinion columnist. “The next few weeks are going to be pretty volatile.”

More than a year ago, El-Erian said the Fed was behind the curve in fighting the fastest inflation in decades, a prediction that came true as the central bank began a rate-hike regime in 2022 that shows no sign of stopping. Financial markets from stocks to bonds to credit have dropped in value this year and liquidity is shrinking to the point where the riskiest deals are now getting hung up.

“How do you reconcile the need to tighten monetary policy with the need to maintain financial stability?” El-Erian said. “That tension is playing out not just at the domestic level but the international level.”

The BOE isn’t the only central bank that has intervened in markets recently, with the Bank of Japan moving to shore up its currency against a soaring dollar.

“These interventions to be clear are temporary,” said El-Erian. “It tells you that the global economy is not clearing on its own. If it is allowed to clear on its own, there’s going to be a lot of collateral damage.”

But with global inflation proving to be persistent, the Fed and its peers likely have no choice but to stick with plans for rate increases, at least for now.

“There has to be more pain before we get to a world where central banks say we are changing our inflation target,” El-Erian said. “There is a justification for changing the inflation target. [But] the credibility blow would be significant.”

Most Read from Bloomberg Businessweek

The Unstoppable Dollar Is Wreaking Havoc Everywhere But America

Jay Powell Needs Investors to Lose Money

Twitter Is in This Mess Because Jack Dorsey Was Too Busy Being a Bitcoin Influencer

Would You Invest $10,000 in a Friend’s Startup? Are You Friends If You Don’t?

The World Sees Brazil’s Election as a Climate Flashpoint. Brazilians Have Other Concerns

©2022 Bloomberg L.P.

Advertisement

Bloomberg

Runaway Bear Market Blows Past Everything Meant to Slow It Down

(Bloomberg) — Unwavering profit projections. Benign chart patterns. Big hedges in the options market. Most Read from BloombergMacKenzie Scott Files for Divorce From Science Teacher HusbandTop Apple Executive Is Leaving After Making Crude Remarks in TikTok VideoMeta to Cut Headcount for First Time, Slash Budgets Across TeamsMarjorie Taylor Greene’s Husband Files for Divorce After 27 YearsPutin Says Annexation Is Forever, Defends Ukraine Land GrabAll the things that bulls expected to put a brake

Barrons.com

Berkshire Board Member and Warren Buffett Crony David Gottesman Dies at 96

David “Sandy” Gottesman, a Berkshire Hathaway board member, billionaire and longtime friend of Warren Buffett, died Wednesday at 96. In 1964, Gottesman founded the New York investment firm First Manhattan, which announced his death on its website. Gottesman befriended Buffett around the time that Buffett took control of Berkshire (ticker: BRK.A) in 1965 and was an early investor in the company when its stock sold for a tiny fraction of its current price.

SmartAsset

Vanguard Says There’s a 65% Chance of a Recession. Here’s How to Prepare

Analysts at the mutual fund giant Vanguard estimate the likelihood that the U.S. will drop into a full-blown recession sometime during the next 12 months at 25%, and some time during the next 24 months at 65%. The Vanguard analysts … Continue reading → The post Vanguard Says There’s a 65% Chance of a Recession – Here’s What to Do appeared first on SmartAsset Blog.

Reuters

Fed seen sticking with rate hikes as inflation stays hot

(Reuters) -Federal Reserve policymakers, who have driven U.S. borrowing costs up faster this year than at any time since the 1980s, got one less reason to slow down on Friday after a government report showed inflation continues to run at a red-hot pace. The personal consumption expenditures price index, the measure by which the Fed targets 2% inflation, rose 6.2% in August from a year earlier, down from 6.4% in July, the Commerce Department reported. Even before the report the Fed was widely expected to deliver a fourth straight 75-basis-point interest rate hike at its next policy meeting in November.

TipRanks

Seeking at Least 16% Dividend Yield? This Top Analyst Suggests 2 Dividend Stocks to Buy

Inflation, interest rates, and recession – these are the bogeymen of investing, and they’ve been watching over our shoulders for the past several months. We all know the story by now, the rate of inflation is running at generational highs, the Federal Reserve is hiking rates in an attempt to push back against high prices, and that’s likely to tip the economy into recession. At a time like this, investors are showing a growing interest in finding strong defensive portfolio moves. It’s a mindset t

Investor’s Business Daily

These Are The 5 Best EV Stocks To Buy And Watch Now

EV stocks have multiplied in Tesla’s wake and as electric cars look to go mainstream. Here are the top-rated electric-vehicle makers.

Reuters

Dollar up on euro as quarter ends, commodity led currencies sink

The dollar rose against the euro on Friday but pared gains late in a session that was muddied by quarter-end trading while riskier commodity-led currencies fell sharply after European inflation hit a record high and U.S. consumer spending increased faster than expected. But while the dollar index was showing its biggest quarterly gain since the first quarter 2015 it was set for its first weekly decline in three weeks. After hitting a record low on Monday, the British currency was on track for a weekly gain after the Bank of England bought British government bonds, known as gilts, on Wednesday, Thursday and Friday.

Benzinga

Honeywell Boosts Dividend By 5%

Honeywell International Inc (NASDAQ: HON) Board of Directors approved an increase in the company’s regular annual cash dividend from $3.92 to $4.12 per share. The increase will be effective starting with the Q4 dividend of $1.03 per share, representing a hike of 5% from $0.98. The dividend is payable on December 2, 2022, out of surplus to holders of record at the close of business on November 11, 2022. Honeywell held $8.6 billion in cash and equivalents as of June 30, 2022. “Honeywell continues

Barrons.com

The Fed Is Starting to Break Things. The Stock Market Is Paying the Price.

The stock market desperately wants to put in a low. The Federal Reserve won’t let it. On the one hand, U.S. economic data remains strong, as jobless claims fell below 200,000 for the first time since May, a sign that the Fed will have to keep raising interest rates to slow down inflation.

No comments

leave a comment