Mohamed El-Erian on inflation: 'be careful of a Fed that is too data dependent'

Hotter-than-expected inflation data sent stocks reeling on Tuesday, effectively dashing investors hopes for a March rate cut. However, comments from some Federal Reserve officials has provided reassurance that cuts will come eventually.
Allianz Chief Economic Advisor Mohamed El-Erian gave Yahoo Finance his three takeaways from this week's data and Fedspeak. He says that the path to the Fed's 2% inflation target is "not going to be smooth" and that the market had "over-embraced the notion of a very soft landing." The third thing he points to is the strong market reaction to the inflation data as an indicator of the depth of the market.
Another concern for investors was the weaker-than-expected January retail sales data. El-Erian, who also serves as President of Queens' College at the University of Cambridge, says that he hopes the data was a "blip." If it's not, El-Erian claims that he will be more concerned about the retail sales data than the inflation data. Why? "Because US exceptionalism has been based on the ability to continue to grow and grow powered by the household sector and powered by retail sales." It's why. EL-Erian says, the US has outperformed other economies.
Other "yellow" flashing data El-Erian is watching is what he is hearing from companies' in their quarterly reports. He notes that companies that have more exposure to lower-income households are seeing more softness. He also points to how guidance has varied strongly from company to company, meaning that "individual name selection is going to be critical... going forward."
Watch the video above to hear what El-Erian says about housing and why investors should "be careful of a Fed that is too data dependent."
Editor's note: T
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[@darnellcapriccioso]

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[@gagnepaingilly]

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[@brianwhitehawker1756]

There seems to be skepticism amongst investors regarding the Federal Reserve's plan to continue increasing interest rates until inflation is stabilized. I'm at a crossroads deciding if to liquidate my dipping 200k stocck portfolio, what’s the best way to take advantage of this bear market?

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[@yeslahykcim]

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[@NomadJoe0323]

Powell made a mistake by saying he expects rate cuts this year. But how that turned into March being the start of 7 rate cuts is a real head scratcher. Wishful thinking.

[@prolific1518]

The financial market has been bullying the fed since 08

[@wallisad2422]

Powell made a mistake not hammering for an extra 0.25 point they paused one meeting too early, and in March the load given to the failing banks last year which doubled to 126B $ is expiring so we will probably have Powell cutting in March for another bailout a potential other bank failures and crsh the market

[@NomadJoe0323]

@@wallisad2422 we were trending in the right direction for several months so I can understand why they thought it would continue. But they spiked the football before crossing the goal line.

[@mingchen8323]

My Car insurance premiums doubled this year compared to previous year. Inflation is still high even though data should the inflation is cooling down.

[@Mohammedumarnggada]

Admirable job, *Vortextrace* I’m glad to see you actively combating these individuals who lack integrity. We must prioritize the protection of the elderly and the wider public from these reprehensible scammers! Well done, my friend!! You deserve the Nobel Peace Prize for your commitment to keeping us safe.💯💯💯💯💯💯💯💯💯

[@joechan8549]

Japan, UK just announced recessions, Germany is in recession, China huge properties problems, people did not eat polk even it price down 35%, USA is very strong, every day companies announced thousands of layoff, but initial unemployment went down, Guess everyone have too much money and do not want to get unemployment benefits.

[@prolific1518]

US is already in a recession. The "official" data won't show that in an election year.

[@johnchieze530]

el-arian who is the former ceo of pimco, has been dead wrong on his pessimistic calls re stock indexes during the entire bull run post pandemic. i've been here calling him out every step of the way: main street must continue buying stocks, dump precious metals

[@alexireland8334]

Did you even listen to what he said? lol

[@TedHawk]

Please dump gold. Central banks (and me) are buying.

[@judyduncan1852]

Such a disconnect with what is being said and displayed on television and what is happening in real life for people struggling to get by

[@joechan8549]

inflation only 3%, I just received my home insurance , it is up 50%, guess I have to exclude this huge increase from that 3.1% government inflation, which exclude food, utilities, gasoline, restaurant, tuition, car insurance, repairs....luckily they did not exclude Oxygen. Sick.

[@jasoncortez1238]

that’s the bad part about homes increasing i value, higher property taxes and insurance goes with it. I never understood why people get excited when their home appreciates in value on paper if they have no plans on selling or refinancing.

[@Goducks34]

He’s been Team Bear since 2020! Imagine all those who listened to him is feeling now! 😅

[@timber-rider]

Existing home supply is low. New home supply is higher than it has been in years. But, the builders are playing buy down games, free appliances, etc to keep their price point high by taking advantage of the existing home prices. Eventually they will capitulate on price as well, especially if interest rates stay above 6%. Existing home supply, especially considering Airbn'bust and so many homes being investor owned will begin to soften only if unemployment goes up.

[@strella8112]

Even a broken clock is right twice a day. That’s him

[@dillon4060]

For how long can the US finance growth through debt?

[@Fear.of.the.Dark.]

as long as USD currency is global reserve currency they will keep on printing. So ultimately inflation will keep on getting worse.

[@andrewhart6200]

It's clear that something is immanent - and honestly it's gross when the Fed Chair President from Chicago is so cluelessly ignorant and biased! I always appreciate what Mohamed says - it feels thoughtful and genuine and aware of how many people that listen to him - stateman like! He is correct abvout the crazy panic-like-Thus they are clearly also very nervous!

[@douglasa.5039]

Very good to get some much needed information about the housing market sector from Mohamed El-Erian.

[@tonykehl9481]

huge run up in retirement account, I now shifted 50% out of equities and to TBills until a correction occurs. I have learned from others "Its not how much you make, its how much you keep."

[@francisravenscroft-dw6gi]

The 'real inflation' has already hit households. So the cost of running a home has risen by 15%. That means that personal finances need to pay groceries first, and 'luxuries' afterwards. And nearly everything else is a disposable luxury- from designer trainers, to going out to dinner once a week. That s before home insurance doubled, car insurance doubled and health care tripled.

[@andrewgleason586]

It has inflation doesn't lie ❤

[@shrdn2960]

Consumers are spending less for sure. Big retail chains are haphazardly trying to reduce their staff as sales figures plummet.

[@greenjoygardens]

MORE JULIE!!!

[@adanroberts7196]

marks having sausage egg chips tonight thats a old british classic

[@zwatwashdc]

Seems pretty obviously that we are in a bit of a doom loop. If you already have a lot of assets, you just keep getting richer. If you don’t have assets and you rely on a wage, you are falling further and further behind.

[@ralphsimpson4593]

"Was" coming down...

[@bps7209]

We hit an all time high and the markets have adjusted from 7 to 3 cuts? 🤔😂

[@stockholmpublishings2937]

this guy was bearish in october, he's a clown. stop having him.

[@Himothy1212]

I’d be bearish to if the stock market was 110% overvalued based on stock gdp ratio

[@method341]

​@@Himothy1212 no one cares about that stupid ratio except for poverty stricken permabears

[@manuvns]

25% jump in Russell 2000 in last 3 months!

[@bdek68]

So what? Still 20% of ATH’s. 40% makes no money and rates are not coming down.

[@jvz28az]

The bailouts from the Gfc, the continued deficit spending, and bad governance for the past few decades has finally started to take its toll. We have been exporting inflation for years. The dollar is declining and losing its value. The treasury is trying to keep selling treasury bonds. We no longer make anything. We only buy things from other countries with some exceptions. We sell our ideas. We’re supporting wars on two fronts. It’s unsustainable.

[@Relaxlifeisshort2]

You wait till march Numbers will be way down they a lagging as usual. See logistics numbers tells you it all

[@Barr894]

Data miss was minor??? Lots sugar coating going on. How do you do three cuts without increasing money supply? That creates more inflation. Inflation only pulled back now it’s ready to go again. He say’s getting to 2 percent won’t be east. How about impossible. And with three rate cuts it goes past 5 percent and keeps climbing.

[@arodriguez2707]

When you say the ability to grow, I think you mean the ability to borrow and go deeper into debt.

[@jlvandat69]

I dunno....right now it looks like US markets are the best-looking house in a bad 'global neighborhood' but how can that be sustainable? I mean, if those economies are in decline, doesn't that eventually pull down earnings for US-based companies also? The answer is above my pay grade, but the imminent recessions in Europe, Japan and the (potential) major economic crisis in China could collectively overpower the strong economic fundamentals in the US. Or so it would seem.

[@alexireland8334]

This is empirical, but I'd have to believe US-based companies are far, far more dependent on domestic consumers than large producers in other countries are. I don't think the US can operate entirely within a vacuum, but I do think it's fair to believe that the US can avoid a crisis that originates within EM or Europe.

[@jlvandat69]

@@alexireland8334 You're probably right....I just checked and about 12-15% of products made in the US are exported, but the percentage varies, based on industry. Example, 20% of agriculture is exported. So, a downturn globally would only have limited impact on the US economy, it seems.

[@Walzheimer]

I am so Sick 🤮 of this FED Lies

[@peterdangelo5882]

M2 is all over the place. Where it is now normally indicates a crash with double digit inflation. We will see. This might end very badly. As for rates, keep them were they are. This is normal not 0 to 2 percent.

[@thomasmazzola4760]

We have a 35 trillion dollar deficit and climbing fast. The yearly deficit is 8% of gdp. The US government is borrowing and spending like drunken sailors, that doesn’t make you rich. Wait till the interest bill comes in and it consumes 50% of all taxes paid to the government

[@InnocentCardGame-sz2be]

The rise in insurance premiums is due to the bad economy for the bottom half and uninsured drivers. So oddly, the worse the economy gets, the more drivers will skip payments, and higher premiums go.

[@jaym9846]

Market saw the economy in abyss and got giddy for FED's gift.

[@DexterHaven]

"Hey Mohamed, remember me? I used to be big." --Bill Gross

[@milosnestorovic1594]

Always the same story.Why always the same,absolutely the same?All this is absolutely familiar and real...

[@Barr894]

Cheerleader for the Fed.

[@williambudd2850]

Both data points are likely due to changing buying patterns by the consumer and I expect it to get worse. The poor and what is left of the middle class are getting more and more angry about food prices and the obvious indication that the government is not going to do anything about that.

[@chrisk7812]

Yes, inflation coming down. I just spent $300 buying avocados and carrots at the super market

[@williewest5574]

Mohammed, you need to straighten out Joe Kernan, he's radical

[@johnboettger864]

Mohamed El knows, you ask him!!

[@theunbearablebull]

He knows how to not make a profit in the stock market that's for sure lol

[@christiancoronado]

Erian is more concerned with the economy slowing down than inflation. He doesn't cate how much you pay for food, shelter, and energy

[@far1762]

Nu e normal ce vad de2zyle😮

[@DD-bh3gh]

Mohamed just got a huge slap from the market..... LOL

[@Himothy1212]

Imagine being this small minded. He wasn’t predicting or even talking about a day to day basis. He was talking farther out months in the future.

[@prolific1518]

​@@Himothy1212 near minded people have gamified the stock market

[@wallisad2422]

if a joke had a face it'll be his, reliving the 70's baby brace yourself

[@niklas4031]

Goolsbee is such a dork

[@michaelbishop9157]

why would the rich want rates to come down

[@PCMenten]

Austin Goolsbee need to go grocery shopping. Inflation is not under control. I spent $200 for three bags of groceries. Eggs $4.00 dozen, bacon $8.00, pot pies $4.00. Edit; because housing is both an expense and an asset, it confounds use as a measure of inflation. The Dara is hopeless as long as people see owning a house as a safe haven for their money.

[@Barr894]

Exact opposite of what Peter Schiff is saying.

[@kunalpatel1539]

watch this guys videos a year ago, he has been completely wrong.

[@dazedhavoc]

If you stand on your head and cross your eyes, the data is clear.

[@andrewgleason586]

Inflation is anchored severely

[@kurttSchuster]

I am actively searching for ways to invest/diversify my $800k portfolio so it can dramatically increase in folds throughout this next bull run.

[@tonicruger]

Thats when you hire someone to manage your money. You need a financial-advis0r straight up! Even while $400k might seem like much, one bad decision might seriously deplete it.

[@chrissmurrayy]

Exactly, a good number of people discredit the effectiveness of financial advisor, but over the past 6years, I’ve had a financial advisor consistently restructure and diversify my portfolio and I’ve made over $3 million in gains… might not be a lot but i'm financially secure and that's fine by me.

[@maddysys]

How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?.

[@chrissmurrayy]

Natalie Ann Brinkman is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.

[@Mcllwain]

I searched for her full name online, found her page, and sent an email to schedule a meeting. Hopefully, she responds soon. Thank you

[@theunbearablebull]

The permabear is crying bearish? No waaaaay

[@JL-rd9bq]

Goolsbee is a fool.

[@johnboettger864]

Mo sells blankets in Hollywood on weekends.

[@SammyC27]

this guy just loves to be on TV

[@SkylerKPHDtrustmebroUNI]

Pumpers for current holders right here. Out right lies. Measuring the economy by the market is dumb. It only reflects people who have enough extra income to invest...not the majority of Americans. You measure average income instead of most commonly occuring or median...so if i make a million a day and 5 other people make 120 bucks a day and you average that, you make 5 people doing really bad look incredible well off.

[@sciencefliestothemoon2305]

Imagine in any other math depended area a person saying "too data dependant" as a negativ. Nahh I want my structural engineer go by his gut feeling please....

[@InnocentCardGame-sz2be]

Your car insurance premiums will be largely impacted by the % of uninsured drivers in your city. Socialism is in capitalism.

[@kirankumarsukumar]

The markets have priced in 2 recessions as well as an economic boom at the same time. Nothing to worry 😂

[@user-gf3lw5pi4t]

RFK all the way to the White House ❤️❤️

[@stevemar8027]

Even the “smartest” don’t look behind the numbers, apparently. Retail sales is not inflation adjusted, which means so called strong previous numbers, largely meant people were paying more for goods because of inflation; not because the consumer was buying more. It just costs more to buy stuff. The fact that the latest retail numbers are weak is even more of a concern.. In terms of inflation numbers, they are cherry picked and not reflective of true inflation. Look at the ppi data that came out. This number was much hotter. It’s not manipulated like cpi is and will translate into higher costs. Inflation has bottomed not topped.

[@chavruta2000]

EL Arian is just a hater.

[@GaetanoCostanza]

Pack of bull

[@Zooby19]

El Erian is a perma bear. If you listened to him you would be broke

[@disneytakeshugedix7463]

America 🇺🇸 loves 🥰 Hyper Inflation 💸 and will continue to print money 💵 and lower interest rates until the US 🇺🇸 Dollar 💵 collapses ! The American 🇺🇸 Government loves 🥰 Hyper Inflation 💸 so much they want the prices of everything to rise until the US 🇺🇸 Dollar 💵 is worth nothing ! Print ! Print ! Print ! Ha ! Ha ! Ha ! Hilarious 🤣