Global Economy Hooked on Debt Needs More to Revive Growth

As policy makers across the globe face low growth and piles of debt, taking on more debt seems to be the favored strategy to reviving their economies. This according to an article in Bloomberg. The article reports that the past decade of easy money has resulted in $250 trillion of government, corporate and household debt across the globe, which represents about $32,500 per person. “Much  of that legacy stems from policy makers’ deliberate efforts to… Read More

Warning from El-Erian: Negative Interest Rates Would Be Disastrous

In response to the recent yield curve inversion, Allianz chief economic adviser Mohamed El-Erian warned that negative yields in the U.S. could wreak as much havoc as political upheaval. This according to a recent article in Chief Investment Officer. The article reports that El-Erian has been alarmed by the decline in Treasury yields and explains, “Negative rates are a reality in Europe and Japan, and some say they have held back economic advances in those… Read More

Some Market Liquidity is Imaginary

A recent article by Bloomberg columnist Mohamed El-Erian warns investors to take a cautionary—and macro—view of a market that has “grown too comfortable and too complacent operating in the ample liquidity pumped in by years of unconventional central bank policies.” El-Erian highlights the example of the recent demise of the Woodford Equity Income Fund (managed by UK-based Neil Woodford) due to a “mismatch between the desire of its investors to withdraw their capital and the… Read More

El-Erian on the Meaning of the Market Rebound

A recent article by Bloomberg columnist Mohamed El-Erian discusses the implications of the robust rebound in U.S. stocks that occurred earlier this  month, noting that it “raised several questions related to market behavior, policy and economics,” adding that how these questions are answered will “prove consequential not only for market prospects but for the global economy.” El-Erian argues that the equity rebound in the first week of June stood in contrast to two other market… Read More

El-Erian: Factors that Could Disrupt Global Growth

A recent Bloomberg article by Allianz chief economic adviser Mohamed -Erian outlines recent global developments that have “exposed cracks in a seemingly happy” market environment, including: “Brexit, tariffs, currency meltdowns in Argentina and Turkey, a China growth scare, and a financial near-explosion in Italy,” to name a few. Although El-Erian argues that the inclination may be to consider each event as unique to its country, this approach “risks overlooking that something deeper is going on… Read More

Stocks Aren’t Reflecting Improving Earnings

An article in Bloomberg addresses the question as to why “impressive corporate earnings results nor the synchronized pickup in global growth nor record levels of stock buybacks by companies has led to impressive gains in stocks.” According to the article, written by Allianz chief economic adviser Mohamed El-Erian, among the various potential reasons for this “decoupling,” there are three that “have an important implication for what likely lies ahead for investors”: “Positive developments are already… Read More

Allianz’s El-Erian Says to Scale Back Risk

Can President-elect Trump deliver on fiscal stimulus and job growth after taking office next month in the face of a fractious American Congress? The question, posed in last week’s Bloomberg, is addressed by Mohammed El-Erian, Bloomberg columnist and chief economic advisor at Allianz SE, who says reducing risk by increasing cash holdings might be a good idea. Trump’s promises for tax cuts and spending increases are bolstering growth forecasts, but El-Erian believes that the currently… Read More

Allianz’s El-Erian Discusses Brexit

According to Mohamed El-Erian, chief economic adviser at Allianz, there is a common thread running through Brexit, claims of inconsistency in the Fed’s actions, the rise of negative interest rates and ‘strange politics”. Investment News reports that, in a recent media briefing, he described the commonality as “advanced economies’ inability to grow in an inclusive manner.” El-Erian explains that when a small segment of the population reaps the benefits of a sluggish economy, “strange things… Read More

Investors face a “New Operating Regime,” El-Erian Says

Mohamed El-Erian, chief economic advisor of Allianz SE and chairman of President Obama’s Global Development Council, says “[f]inancial markets are now transitioning . . . to a new operating regime.” He contends that this means “volatility bouts will be more frequent and, in some cases, more violent than in the last few years.” Further, he suggests that that “challenge will be in monitoring carefully the tipping points for various market segments, along with related price… Read More

El-Erian: Expect Major Volatility – and Big Opportunities

Mohamed El-Erian, says to expect major volatility in the coming months — volatility that will create some great opportunities. “We have a bumpy road ahead of us, but I keep on stressing, it will create a lot of attractive opportunities,” he told CNBC. El-Erian said the global market may experiencing a shift to a “higher volatility regime,” meaning that asset allocations will become aggressive and price multiples will begin “looking high.” That’s when markets overshoot… Read More