El-Erian: Brace for 'violent' shocks

[Real Money]

Oh really?

Yes.

[Dec 13, 2021] El-Erian says the Fed made the worst policy mistake in the history...
https://www.cnbc.com/2021/12/13/el-...inflation-call-in-the-history-of-the-fed.html

“The characterization of inflation as transitory is probably the worst inflation call in the history of the Federal Reserve, and it results in a high probability of a policy mistake,” the former Pimco CEO and current Queens’ College president said Sunday on CBS’ “Face the Nation.”
​

and

“If they catch up now, if they’re honest about their mistake and take steps now, they can still regain control of it,” he said.​

What he is saying here, is that the Fed made a grave error (they should be in front of inflation) and they are going to be late, very late, if they are wrong on this call (no more hot CPI prints)

He is warning that they will be forced to flip, have to move from the Fed's most accommodative policy in history, and be forced to embark on a very aggressive series of rate hikes.

A policy mistake means they have become part of the problem, and are about to really fuck up (markets AND the economy). He was right from this call on, and if you had followed his advice and gone to cash...

The whole justification for QE was that "inflation remains stubbornly low" and other such nonsense (minority unemployment rate targeting, etc.)

 

[schizo]

He is warning that they will be forced to flip, have to move from the Fed's most accommodative policy in history, and be forced to embark on a very aggressive series of rate hikes.

Fair enough. He's raised a red flag and warned of the dire consequences if the Fed don't change course. But What took him so long? By Dec 13, 2021, the date of the above article you posted, we were already neck deep in inflation. I've personally been bitching about the high inflation since the early 2020. In fact, a lot of folks online have been bitching long before El-Erian made his warning. Why do these economists have to wait until it becomes so evident? That's my point (!!!)

 

[schizo]

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.

Sorry but I'm not even gonna bother replying, other than the fact that when the market tanks AGAIN, they will all change their minds once again. They're like a damn squirrel on a ferris wheel.

 

[Real Money]

Why do these economists have to wait until it becomes so evident? That's my point (!!!)

I agree. The Fed and government have been conspiring to underreport, and understate inflation for decades.

They ignore cyclical baskets, they don't account for shrinkflation, they substitute lower quality goods into the CPI basket, they 'seasonally adjust' and massage the data whenever possible. They use idiotic surveys and 'self reported' data (owners equivalent rent), and they don't put any limits on the most important shit like Case-Shiller and a million other things. They've been ignoring M1, M2, M3 for years...every time opting for easy policy choices. They "prefer" cooked numbers and manipulated statistics (Core CPI, Chained CPI, etc.)

People are too ignorant to have relevant opinions on monetary policy. They are being taken advantage of.

 

[Businessman]

I agree. The Fed and government have been conspiring to underreport, and understate inflation for decades.

Consumer price inflation is bull shit, always been obvious to me that real inflation shows up in asset price inflation. To see house prices, stocks, gold prices.. all rocket 600% over the last 25 years but be told official inflation was only 100% over the same time.

All the CPI nonsense is just deflection and gaslighting. They tell us to just ignore asset price inflation and be happy because the price of eggs is not going up..

 

[M.W.]

Isn't that exactly what he has done? Venture his analysis about the future, not the past.

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?

 

[M.W.]

Upset because he is not talking his book? I mean, what do you want him to say? Consensus is that we are close to the bottom, he begs to disagree, what part of that don't you like about him? He knows more about the economy than anyone on this entire forum.

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.

 

[M.W.]

And he DID make those predictions last year, that year when everyone talked about transitory inflation. He was spot on.

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.

 

[M.W.]

Don't you actually do exactly what you belittle about others? You cried about high inflation back in 2020. No shit. Everyone did. But he took on a forecast about the characterization of inflation and went against the most powerful central bank in the world as an influential figure. How many others joined his camp back then? Very few

Fair enough. He's raised a red flag and warned of the dire consequences if the Fed don't change course. But What took him so long? By Dec 13, 2021, the date of the above article you posted, we were already neck deep in inflation. I've personally been bitching about the high inflation since the early 2020. In fact, a lot of folks online have been bitching long before El-Erian made his warning. Why do these economists have to wait until it becomes so evident? That's my point (!!!)

 

[misterkel]

The S&P is up 530 points since just last month's low

Bear bounce?