Mohamed A. El-Erian Re-poster

.@nvidia #ai #economy #markets @FT

The February data for US consumer confidence delivered a pleasant surprise. Surpassing the consensus prediction of 86.8, the composite index reached 91.2. This marks an improvement over the revised prior reading of 89.0, which was originally reported as 84.5. What stands out is that this overall increase occurred despite a dip in the current conditions sub-index. Consequently, the upward movement was powered solely by rising hopefulness regarding the future outlook. In terms of inflation, however, the view remains persistent, as median expectations remained unchanged at 4.4%.

#economy #markets #confidence #sentiment #growth #inflation

Hello everyone.

Attention is currently focused on the Japanese Yen, which fell roughly 1% relative to the US Dollar in early trading. This drop occurred after domestic news outlets reported that Prime Minister Takaichi expressed a firmer opposition to interest rate increases during her discussions with Governor Ueda of the central bank.

We observed a fascinating immediate reaction in the form of a twin sell-off, characterized by the currency weakening while bond yields climbed. Although such market behavior is typically characteristic of developing nations, similar patterns emerged in the US during the previous year under comparable conditions.

The critical issue to watch is the degree to which Japan's new, stimulus-focused government will attempt to pressure the BoJ into compliance. In the years following the Global Financial Crisis of 2008, central banks in developed nations acted as the sole authority on policy. However, the current environment is changing, with these institutions facing increasing political resistance in advanced economies.

#economy #markets #japan #boj #centralbanks

There is a significant amount of commentary, much of it quite confident, regarding the precise impact of the new tariff framework introduced by the US Administration this past weekend. Readers should approach these viewpoints with skepticism because this policy is far from its final state. The replacement for IEEPA is strictly temporary. It also produces a range of unintended side effects, which include penalizing friendly nations while simultaneously reducing the strain on adversaries. You should expect the tariff landscape to shift further in the upcoming weeks as the administration activates different authorities. Consequently, this environment of uncertainty is hindering corporate decision-making processes and influencing countries engaged in trade discussions, a point highlighted by the EU announcement.
#economy #trade #tariffs #markets

Businesses and financial markets are currently in the process of evaluating the precise consequences of the developing US tariff regime. Against this backdrop, gold has experienced an early morning surge, with prices reaching roughly $5,150. You can view the trajectory in the CNBC chart presented below.
#economy #markets #gold

Greetings everyone.

Below you will find access to my latest weekly analysis regarding the global economy and markets. This update focuses on interpreting the events of the past week and outlining what to anticipate in the days ahead.

https://www.linkedin.com/pulse/weekly-look-global-economy-markets-mohamed-el-erian-w9nie
https://mohamedelerian.substack.com/publish/posts/detail/188812734?referrer=%2Fpublish%2Fposts%2Fpublished

#economy #markets

In addition to the points raised by the @WSJ, it is important to highlight the tasks lying ahead for corporate entities. Once the updated tariff landscape finds its footing, companies will be responsible for defining exactly what the new regulations involve. Specifically, this analysis requires understanding how the modified terms will affect distinct geographic regions and market sectors.
#economy #trade #tariffs #markets

Determining liability and ownership is central to the intense conversations surrounding the IEEPA Supreme Court decision. With a staggering $133 billion in potential tariff refunds at stake, this topic is generating widespread discussion and is set to move into judicial venues in the near future. Uncertainty also surrounds the future structure of these trade duties, particularly as the Administration investigates at least three alternative legal paths. While Secretary Bessent has implied that the aggregate volume of tariff collections might remain unchanged by the end of the year, the specific impact on individual businesses and market sectors could look vastly different.

#economy #tariffs #trade

Determining the precise financial liabilities between parties has emerged as a critical issue. Conversations are currently focused on the IEEPA Supreme Court ruling and its effect on potential tariff refunds amounting to $133 billion, a topic that is generating debate in many circles and will shortly reach the courts. There is also considerable uncertainty regarding the future landscape of the trade regime, given that the Administration is following at least three alternative legal paths. While Secretary Bessent has indicated that total tariff collections may remain static by the end of the year, the actual burden placed on individual companies and industry sectors could look quite different.
#economy #tariffs #trade

We have a new development regarding US tariffs. The Supreme Court has decided against specific elements of the policy set forth by the administration. This places the burden of action back on the administration itself. The outcome will now be determined by their willingness and capacity to enact tariffs through different legal avenues. #economy #tariffs #markets

While recent economic reports from Japan and Europe have been encouraging, the latest figures out of the United States fell short of expectations in two key areas.

First, the Gross Domestic Product for Q4 expanded at an annualized rate of just 1.4%. This represents a significant decline from the 4.4% growth seen in Q3 and misses the consensus prediction of 2.8% by a notable margin. As a result, the growth rate for the full year of 2025 sits at 2.2%, a decrease from the 2.8% achieved in 2024. Analysts will likely scrutinize the weak data surrounding government impulse and personal consumption, while political discussions are expected to revolve around the consequences of the recent government shutdown.

Second, inflation remains sticky. Core PCE, the preferred measure for the Fed, climbed 0.4% for the month. This increase drives the annual rate to 3.0%, which is hotter than the consensus estimate of 2.9%.

#economy #growth #inflation #markets

According to Bloomberg. #economy #markets #centralbanks

It has been a bright start to the day for advanced economies, with five separate data releases performing better than expected.

Starting in Asia, Japan saw headline inflation for January slow to 1.5%, a figure that was softer than anticipated. Notably, this represents the first instance in nearly four years where the rate has dipped beneath the target set by the central bank.

In Europe, the Eurozone PMI outperformed consensus forecasts. This achievement was driven by a significant turnaround in Germany, where the manufacturing sector entered expansion territory for the first time in almost four years.

Meanwhile, the UK delivered a trio of strong updates. January saw the largest budget surplus on record, thanks to a combination of lower debt-service payments and rising tax revenues. This financial boost provides the government with substantial headroom within its fiscal rules, offering valuable flexibility for the final quarter of the fiscal year.

Further strengthening the British outlook, the January PMI increased to 53.9. This result topped the consensus prediction of 53.2 and stands as the strongest reading in nearly two years. Finally, retail sales in the UK surged by 1.8% in January, shattering the forecasted 0.2% rise. This marks the fastest pace of growth for the sector in almost two years.

#economy #markets #Japan #UK #Germany #Europe

According to the @FT, shares of leading private investment managers on Wall Street fell on Thursday. This market reaction occurred after Blue Owl permanently restricted investors from exiting a debt fund meant for retail clients, causing concern across the industry.
#markets #privatecredit #blueowl #investing #investors

Emily Peck of Axios highlights new statistics derived from ADP data that align with other, though not entirely universal, signs of a softening workforce landscape. The report indicates that the substantial pay raises previously associated with changing jobs have decreased to their lowest point since 2020. In terms of specific figures, the median wage growth for employees who stayed with their current companies rose by 4.5% over the past year. Conversely, the increase for workers jumping to new employers was recorded at 6.4%. #econmy #jobs #employment #umeployment

An interesting trend in the US labor market was recently spotlighted by @Axios. Reporting on figures from ADP, Axios journalist Emily Peck reveals that the era of substantial pay raises for those changing jobs is fading. In fact, job-hoppers are currently experiencing the smallest salary gains since 2020.

A look at the specific data shows that while median pay grew by 4.5% over the last year for employees who remained with their companies, the increase for those switching roles was 6.4%. This narrowing difference aligns with various other signs that the labor market is softening, even if not every indicator agrees.

#econmy #jobs #employment #umeployment

Here is some additional insight regarding the correlation between stocks and bonds, courtesy of the IMF. The organization highlights that following the onset of the pandemic, fixed income assets have become less reliable for softening volatility within equity markets. Rather than acting as a counterweight to the risks associated with stocks, bonds are frequently trending in the same direction. This synchronization becomes especially evident during periods of intense market liquidation.

I would add that the significant spike in positive correlation, which compromises the classic efficacy of diversifying portfolios with stocks and bonds, has seen a partial reversal during the most recent timeframe. Even with this adjustment, however, the historical negative correlation is still uncharacteristically frail.

#economy #markets #portfoliodiversification #investing #investors @IMFNews

According to the IMF, the framework powering the world's second-largest economy is meeting with rising obstacles. Local demand has remained quiet, a trend primarily caused by the extended downturn in real estate and a frail social safety net, both of which have dampened the public's desire to spend. These conditions have led to deflationary stress and a heavier reliance on demand from abroad. However, simply banking on greater exports will not be enough to secure lasting growth for China in the future. #economy @IMFNews #China #growth

For those watching the high-frequency US data:
A dual beat in this morning's data as both initial jobless claims and the Philly Fed manufacturing index (below) were stronger than the consensus forecasts.
#economy #markets #growth #jobs

I am circling back to the news regarding Blue Owl that I discussed in my previous update. Please take a moment to review this chart published by the Financial Times.

#economy #markets #blueowl #privatecredit @FT