El-Erian is not a Perma bear like say Peter Schiff, so this is scary stuff, although for traders it means volatility (assuming your broker doesn't go bankrupt taking out your trading account in the process). Brace for 'violent' shocks that may reshape the global economy forever, warns top economist Mohamed El-Erian The global economy is headed for a severe recession, Mohamed El-Erian has warned. The economist expects "more uncertainty in the future as shocks grow more frequent and more violent". The recession will be drawn-out rather than "short and shallow", he added. "Three new trends in particular hint at such a transformation and are likely to play an important role in shaping economic outcomes over the next few years: the shift from insufficient demand to insufficient supply as a major multi-year drag on growth, the end of boundless liquidity from central banks, and the increasing fragility of financial markets," El-Erian wrote in a Foreign Affairs op-ed. "These shifts help explain many of the unusual economic developments of the last few years, and they are likely to drive even more uncertainty in the future as shocks grow more frequent and more violent," he added. "These changes will affect individuals, companies, and governments – economically, socially, and politically." "From the US Federal Reserve's initial misjudgment that inflation would be 'transitory' to the current consensus that a probable US recession will be 'short and shallow,' there has been a strong tendency to see economic challenges as both temporary and quickly reversible," he said. https://markets.businessinsider.com/news/currencies/top-economist-mohamed-el-erian-recession-global-economy-federal-reserve-2022-11
Calling a 0.25% 2year yield "liquidity" is a gross mischaracterization of what was done. Criminal fucking banks is what we have. The idea that they could do shit like that and it would "maintain price stability" or enable "sustainable" growth is asinine. Bring on the reckoning. Long overdue.
I beg to differ. While El-Erian is a smart dude, he's reasoning is in line with the rest of the IMPOTENT (not important) economists, especially those at FOMC. He gives optimistic outlook when the stock market is buzzing and gives a dire outlook when it's in a downward spiral. In fact, he did just that during 2008 financial crisis as well. UNLESS YOU'RE AN IDIOT, WHO WANTS TO HEAR A HINDSIGHT ANALYSIS? I mean, as an economist, you're supposed to make a correct forecast BEFORE shit hits the fan. What's the point of giving a doom and gloom scenario when EVERYONE knows that already?
No one can predict when. Everyone is either too early or too late. Like Jim Rogers and Peter Schiff, been going on about the coming crash for the last 10 years or more. And get it wrong, which is very likely when you predict, then no one takes you seriously again, like Schiff and Rogers.
But then again, who wants to take you seriously when you're always curve-fitting with a hindsight analysis?
El-Erain is good. President Queens College, former CEO and co-CIO PIMCO... The guy knows his shit. Curve fitting? Please. This guy is always relevant, and always informed. He was calling out the Fed "transitory" bullshit a long time ago. Long before the sell-off and long before team permabull would admit any possibility of market weakness. His new call is for a 2023 recession. The alternative read is a soft landing and rapid recovery. He's right again.
Oh really? So you didn't already know that there would be a recession down the road, as if this is a new revelation? As such, just what is so revelatory about what he has said AT THIS POINT IN TIME? The market has been tanking for much of this year from the ATH (which we already know) and that major companies are laying off or plan to lay off their workers (which we also already know). So okay, we'll get a recession in 2023. Well, to that I say "No shit, Sherlock!" Had he made those bearish calls last year, maybe I would grant him some credit. But no, he's just like any other friggin' economist out there who won't stick one's neck out until it's so plain to EVERYONE that there's absolutely no margin of error.
The S&P is up 530 points since just last month's low. So evidently it is not plain to EVERYONE that a severe recession is going to happen in 2023, many are betting the Fed will pivot sometime in 2023 and the party will restart.