Mohamed A. El-Erian

Rene M Kern Prof of Prac at Wharton. Allianz Advisor. Gramercy Chair. Chair of UnderArmour Board. Former Pimco CEO/co-CIO and President of Queens' Col Cambridge

[Mohamed A. El-Erian @elerianm]

Good morning.
A big "thank you" to the one million of you for making this milestone possible.
I deeply appreciate your engagement, insights, and time.
My main goal here has always been to share what I find to be interesting economic and financial issues...with the occasional sports reference thrown in!
Most of my posts aren't aimed at asserting definitive conclusions, but rather to highlight the issues, data, and readings that can help us figure things out together.
Thank you very much for being part of this journey.

[Mohamed A. El-Erian @elerianm]

Posted earlier today:
On the misreading of Kevin Warsh, the new Federal Reserve Chair:
https://t.co/1YrFwmKIOi
@ft #economy #markets #federalreserve

[Mohamed A. El-Erian @elerianm]

The link to this afternoon's conversation with Scott Wapner on Closing Bell.
Thank you, Scott, for having me on your show.
https://t.co/vzWh2Aj7tI
#economy #markets #federalreserve @TheJudgeCNBC @cnbc @CNBCClosingBell

[Mohamed A. El-Erian @elerianm]

The rally continues as gold tops $4,400 per ounce, up 2.45% on the day.
#economy #gold #markets #investing #investors

[Financial Post @financialpost]

Mohamed El-Erian: Kevin Warsh is committed to turning around the Federal Reserve. If he succeeds, he could spur an evolution in central banking. Read here now https://t.co/0zOSVxQd4S

[Mohamed A. El-Erian @elerianm]

These charts come from Katie Martin in the @FT, "After the great deleveraging.
Speaks to the view that excessive leverage, particularly in Korea, temporarily derailed the impressive stock market gains.
Looking ahead, the key questions center on residual equity leverage, other financial imbalances, and whether underlying economic and corporate fundamentals can remain solid. #economy #markets @katie_martin_fx

[Mohamed A. El-Erian @elerianm]

Further to my previous post:
Here's the reaction in US government bonds yields -- this as market expectations for a September rate hike drops by some 15 percentage points to 42%.
#economy #markets #federalreserve #bonds

[Mohamed A. El-Erian @elerianm]

Two initial takeaways from a US Jobs Report that saw job creation fall well short of consensus (-23,000 vs. +80,000 expected), accompanied by heavy downward revisions to prior months (-103,000), yet the unemployment rate edged lower to 4.1% (from 4.2%):
Not good news for Main Street: The decline in labor force participation (down to 61.4%) points to underlying issues with the supply side of the labor market, something that I have written about before. It needs to sharpen the focus on strengthening supply-side dynamics across both public and corporate policies.
Good news for Wall Street: Both equities and fixed income markets should react positively to a downward shift in market expectations for Fed rate hikes due to this Jobs Report — a dynamic further reinforced by softer-than-expected average hourly earnings growth (3.2% vs. 3.5% expected).
#economy #markets #jobs #employment #unemployment

[FT Opinion @ftopinion]

Warsh is being misread — Mohamed El-Erian https://t.co/FYsl8Z6gBh

[Mohamed A. El-Erian @elerianm]

On the misreading of Kevin Warsh, the new Federal Reserve Chair:
https://t.co/27ExI4qkNl
#economy #markets @FT #federalreserve

[Mohamed A. El-Erian @elerianm]

Welcome to US Jobs Friday, where consensus is expecting a “no-drama” report for both headline payrolls and the unemployment rate (Bloomberg table below).
While the headline numbers will attract immediate market attention, also keep an eye on:
Labor Force Participation: Can a better supply side help rebalance the market and sustain economic growth?
Average Hourly Earnings: Whether wage growth poses an inflation risk?
Policy Implications: The closer this report lands to consensus, the faster market focus will pivot to next week’s (and next month’s) CPI inflation as THE decisive factor for September Fed rate expectations.
#economy #jobs #employment #unemployment #markets #inflation @BLS_gov

[Annmarie Hordern @annmarie]

“Warsh is being misread,” says @elerianm

“Ultimately, the era of central banks as indiscriminate shock absorbers and perpetual providers of forward guidance is inconsistent with today’s geoeconomic realities. Success in this new regime requires abandoning the misleading comfort of the old playbook.”
https://t.co/FM6j72jPk6

[Mohamed A. El-Erian @elerianm]

Ahead of tomorrow's US jobs report and -- more importantly for most Fed officials -- next week's CPI inflation data, markets see a 57% probability of a September rate hike by the Federal Reserve. Kalshi has it at 50% (below).
#economy #markets #federalreserve

[Mohamed A. El-Erian @elerianm]

A few things to watch beyond the main macro headlines:
Copper at another record high: Strong global demand continues to intersect with supply tightness, now compounded by export disruptions in the DR of the Congo (Bloomberg chart below).
Alphabet’s bond sale: The company is reportedly issuing $25 billion across 10 tranches with 2- to 40-year maturities. This follows some $50 bn of issuance year-to-date.
SpaceX lockup expiration: SpaceX shares are navigating post-IPO share unlock.
#economy #markets #commodities #copper #alphabet #spaceX

[Mohamed A. El-Erian @elerianm]

Today’s data provides fresh confirmation of US economic resilience, as another sub-200,000 jobless claims print landed alongside stronger-than-expected productivity and muted labor costs:
Initial Jobless Claims: 199,000 (vs. 205,000 consensus)
Q2 Productivity: +1.4% (vs. 0.6% consensus and up from Q1’s 0.8%)
Unit Labor Costs: +1.3% (below the 2.1% consensus)
The focus now shifts in a big way to tomorrow's Jobs Report and next week's CPI inflation.
#economy #markets #jobs #employment #growth #productivity #inflation

[Mohamed A. El-Erian @elerianm]

The gold price is back at mid-June levels.
#economy #markets #gold

[Demis Hassabis @demishassabis]

I’ve been working towards AGI my whole life, and as we enter this pivotal moment, I’m stepping into a new role as Chair of Google DeepMind & Chief Scientist of Alphabet. This will allow me to focus on long-term strategy, and accelerating scientific breakthroughs, including leaning into my work at Isomorphic to help cure disease.

I’m excited that @koraykv will be stepping up to lead GDM as SVP, alongside @joshwoodward and our exec team. I could not be more excited and confident about our amazing next chapter! 🚀

https://t.co/2WtlIIlTUa

[Mohamed A. El-Erian @elerianm]

The latest US ISM Services data release points to continued expansion for a sector that, alongside AI-related spending, remains a crucial engine of economic growth.
The composite index edged higher in July to 54.1 (from June’s 54.0). While it missed the consensus forecast of 54.5, both the current activity and new orders subcomponents remained solid.
Two other aspects of this report stand out:
Employment: Dropped back into contractionary territory at 47.4.
Prices Paid: Rose from 67.7 to 70.3.
The weakness in the employment component will sharpen the market's focus on Friday’s Jobs Report.
#economy #growth #employment #inflation #markets #services

[Mohamed A. El-Erian @elerianm]

👇🏼

@FIFAWorldCup #argentina #egypt #worldcup @fifacom_ar

[Mohamed A. El-Erian @elerianm]

The US labor market watch continues today with the release of the ADP report, where the consensus forecast is looking for 65,000.
This follows yesterday’s JOLTS, which showed a fall in vacancies.
It comes ahead of Friday’s big Jobs Report, where consensus is looking for solid, no-drama numbers:
80,000 in July monthly job creation,
an unchanged unemployment rate of 4.2%,
labor force participation edging higher to 61.6%, and
unchanged annual average hourly earnings growth of 3.5%.
#economy #markets #jobs #employment #unemployment

[Mohamed A. El-Erian @elerianm]

Good morning.
It's worth noting that, for once, the global macro context is unusually calm this morning, at least as judged by the market prices that drive the system:
Major bond yields and key currencies are essentially unchanged, oil is trading in a tight range, and the KOSPI’s daily move is sitting in the 3% range (relatively contained after its recent bout of wild volatility). Trading volumes across the board are at a sleepy summer crawl.
Beneath this surface calm, however, lies a "wait-and-see" relating to a series of unanswered questions with potential opposite outcomes.
So let's enjoy this calm while it lasts, especially as I suspect that more volatility and dispersion lie ahead.
#economy #markets