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Paul Krugman backed calls for the Fed to change its inflation target to 3% – but Mohamed El-Erian says there's little chance of that happening. The two economists voiced their views ahead of Fed chair Powell's speech at Jackson Hole on Friday. "It is very hard for a central bank to change an inflation target when it has been missing it so consistently," El-Erian said. The two economists' comments come ahead of Fed chair Jerome Powell's speech at the 2023 Jackson Hole Economic Symposium on Friday. "It is very hard for a central bank to change an inflation target when it has been missing it so consistently," El-Erian told CNBC on Monday.
Persons: Paul Krugman, Mohamed El, there's, Jackson, Erian, Jerome Powell's, Jason Furman's, Krugman, it's, Powell Organizations: Service, CNBC Locations: Wall, Silicon
Paul Krugman has long been a critic of the Fed's 2% inflation target, and suggests the goal be bumped up to 3%. But central bankers' reaction to such suggestions is similar to what "you'd get if you waved a Pride flag at a DeSantis rally," he says. It's not the first time that Krugman has called for a 3% inflation target. But economist Mohamed El-Erian disagrees – warning there's no chance the Fed will calibrate its inflation target, even though it's a strong argument. AdvertisementAdvertisement"So yes, there's a theoretical argument for a higher inflation target, but don't look for chair Powell to touch that issue in any significant way," he added.
Persons: Paul Krugman, Krugman, we'd, Ron DeSantis, I've, It's, Jason Furman's, Mohamed El, it's, Erian, Powell, Jerome Powell's Organizations: New York Times, Service, Florida, CNBC Locations: Wall, Silicon
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailDon't expect Fed Chair Powell to adjust the inflation target, says Mohamed El-ErianMohamed El-Erian, Allianz and Gramercy advisor and president of Queens' College, Cambridge, joins 'Squawk on the Street' to discuss what investors are likely to hear from Powell's Jackson Hole speech, any changes to the inflation target, and his thoughts on China's economy.
Persons: Powell, Mohamed El, Erian Mohamed El, Powell's Jackson Organizations: Erian, Allianz, Gramercy, Queens ' College , Cambridge
A vegetables stall in the Haizhu area of Guangzhou, China, in May 2023. Stocks in China and Hong Kong fell Wednesday as China's consumer prices slipped into negative territory in July, for the first time in 28 months. The CSI300, which tracks stocks of the largest listed companies in Shanghai and Shenzhen, fell 0.22%. Mainland Chinese markets were lower, with the Shanghai Composite down 0.36% and the Shenzhen Component 0.28% lower. Producer price index fell 4.4% in July compared to a year ago, more than the 4.1% expected by economists polled by Reuters.
Persons: Hong Kong, China's, Mohamed El, Kospi, Australia's Organizations: Shenzhen, Reuters —, Reuters, Allianz, Twitter, Nikkei Locations: Haizhu, Guangzhou, China, Stocks, Hong, Shanghai, Shenzhen, Asia, Pacific
US gas prices are on the rise again, stoking concerns that it could fuel inflation. The average gallon of gas traded at $3.89, its highest level since October 2022. The average gallon of gas traded at $3.89, its highest level since October 2022, per AAA. The surge in gas prices comes amid rising oil prices, largely spurred by supply cuts by key producers including Saudi Arabia and Russia. Mark Zandi, chief economist of Moody's Analytics, said the spike in oil prices were a threat to his optimism about US inflation.
Persons: Mohamed El, Erian, Mark Zandi Organizations: Federal Reserve, AAA, Brent, West Texas Intermediate, Allianz Locations: Saudi Arabia, Russia
Fitch's downgrade of the US government's credit score on Tuesday has come as a shock to markets. Here's how 8 top voices have reacted, including Jamie Dimon, Warren Buffett and Larry Summers. But the decision of a credit rating agency today, as the economy looks stronger than expected, to downgrade the United States is bizarre and inept," Summers said in a post on X. Fitch rating services down grades US credit rating from AAA to AA+. I strongly disagree with Fitch's decision, and I believe it is entirely unwarranted," Yellen said.
Persons: Jamie Dimon, Warren Buffett, Larry Summers, Fitch, Berkshire Hathaway, Treasurys, Buffett, Dimon, Jeenah, Summers, Mohamed El, Erian, Paul Krugman, Krugman, Robert Kiyosaki, Rich Dad, Brace, Janet Yellen, Patrick Semansky, Yellen, Mark Haefele, Haefele Organizations: AAA, Service, Biden, Wall, Berkshire, CNBC, JPMorgan, Allianz, Fitch, AA, Fed, Treasury, AP, UBS Global Wealth Management Locations: Wall, Silicon, U.S, United States, States
Traders work on the floor of the New York Stock Exchange (NYSE) on August 02, 2023 in New York City. This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Stocks sell-offAll major U.S. indexes sank Wednesday as investors digested news of the U.S.'s lower credit rating. [PRO] S&P 500(0)Fitch Ratings may have lost confidence in the U.S.'s creditworthiness, but analysts are still bullish on the stock market.
Persons: Stocks, JPMorgan Chase, Jamie Dimon, Larry Summers, Mohamed El, Erian, , Fitch Organizations: New York Stock Exchange, CNBC, U.S, Nasdaq, Nikkei, Fitch, Global, JPMorgan, Former U.S, Allianz, China New, Qualcomm Locations: New York City, Asia, Pacific, China, U.S, It's
Traders work on the floor of the New York Stock Exchange (NYSE) on August 02, 2023 in New York City. This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. [PRO] Value picks in the S&P 500A common complaint about the S&P 500 now is that it's too expensive. But there are still pockets of value in the index, CNBC Pro's Bob Pisani says.
Persons: Stocks, Larry Summers, Mohamed El, Erian, Jamie Dimon, Dow Jones, Bob Pisani Organizations: New York Stock Exchange, CNBC, U.S, Nasdaq, Mining, Fitch, Global, Former U.S, Allianz, JPMorgan Chase, Labor Department, Qualcomm Locations: New York City
Top economists and administration officials bashed Fitch's downgrade, calling it bizarre. Even Nobel laureate and economist Paul Krugman was baffled about "that bizarre Fitch downgrade," as he posted on X. "I am very puzzled by many aspects of this announcement, as well as by the timing," wrote El-Erian, the chief economic adviser to German financial services giant Allianz. Former Treasury Larry Summers slammed Fitch's downgrade on X, posting that the decision is "bizarre and inept" given that the American economy looks "stronger than expected." Fitch flagged the risk of a US credit rating downgrade in May citing political "brinksmanship" in negotiations over raising the debt ceiling.
Persons: Fitch, there's, bashed, Janet Yellen, Paul Krugman, Mohamed El, Erian, Treasury Larry Summers, Biden Organizations: AAA, Service, Allianz, Treasury, Dow Jones Industrial, Nasdaq Locations: Wall, Silicon
Fitch's US credit-rating downgrade means there's less faith in the dollar and Treasury bills, Kevin O'Leary said. This will push sovereign wealth funds to be weary of holding greenbacks, he told Fox News. Doesn't matter: the more the government goes into deficit spending, the more rating agencies scrutinize the quality of that debt," O'Leary said. This is the second downgrade the US has ever received, preceded by S&P Global's 2011 downgrade. Effectively, the lowered rating also means a higher cost of borrowing for the US, which deepens federal deficit spending.
Persons: Kevin O'Leary, Fitch, O'Leary, That's, Goldman Sachs, Jamie Dimon, Mohamed El, Erian Organizations: Treasury, Fox News, Service, US Treasury, AAA, AA, Wall, CNBC Locations: Wall, Silicon, America
While financial markets on Wednesday took a break from their monster rally of 2023, economists largely expect the impact on the economy to be minimal. Some even questioned the timing of Fitch's action, saying it seems to come after the biggest scare to whether the U.S. would meet its debt obligations has passed. Overall, this announcement is much more likely to be dismissed than have a lasting disruptive impact on the US #economy and #markets." It also cited the battles that warring congressional factions have had over the debt ceiling as well as budget standoffs. Goldman also said it does not see a meaningful impact on holders of Treasurys or other government-sponsored or municipal debt.
Persons: Mohamed El, Erian, Fitch, Veronique de Rugy, de Rugy, that's, Goldman Sachs, Goldman, There's Organizations: Poor's, Fitch, Allianz, Twitter, AAA, Mercatus, George Mason University, Treasury, Federal Reserve, Congressional, Moody's, Service Locations: U.S
Global stock markets tumbled on Wednesday after ratings agency Fitch downgraded the United States' long-term credit rating — but top economists say there is nothing to worry about. U.S. stock futures were sharply lower after the downgrade, pointing to a fall of almost 300 points for the Dow Jones Industrial Average at the Wednesday open on Wall Street. Current Treasury Secretary Janet Yellen described the downgrade as "outdated." Phillips said the downgrade "should have little direct impact on financial markets as it is unlikely there are major holders of Treasury securities who would be forced to sell based on the ratings change." Harvey noted that, ahead of the 2011 S&P downgrade, stocks were in correction territory, credit spreads were widening, rates were falling, and the global financial crisis "was still in the market's collective conscience" — whereas the conditions today are "almost the opposite."
Persons: Fitch, Larry Summers, Mohamed El, Erian, Summers, Janet Yellen, Goldman Sachs, Alec Phillips, Phillips, Wells, Chris Harvey, Harvey, Mark Mobius, they've, CNBC's Organizations: United, AAA, Dow Jones, U.S ., Allianz Chief, Treasury, Wells Fargo Securities Head, Equity, CNBC, ., Mobius Capital Partners Locations: United States, London, Asia, Pacific, Wells Fargo, U.S
U.S. Capitol police stand outside the Capitol building as the Senate votes on debt ceiling legislation to avoid a historic default at the U.S. Capitol in Washington, U.S., June 1, 2023. Fitch downgraded the United States to AA+ from AAA, citing fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills. With the downgrade it becomes the second major rating agency after Standard & Poor’s to strip the United States of its triple-A rating. Investors use credit ratings to assess the risk profile of companies and governments when they raise financing in the debt capital markets. Other analysts had pointed to the risk that another downgrade by a major rating agency could affect investment portfolios that hold top-rated securities.
Persons: Evelyn Hockstein, Fitch, Joe Biden, Janet Yellen, Biden, Karine Jean, Pierre, Keith Lerner, Raymond James, Ed Mills, Mohamed El, Davide Barbuscia, Jyoti Narayan, Lewis Krauskopf, Saeed Azhar, Megan Davies, Arun Koyyur, David Gregoiro, Gerry Doyle Organizations: Capitol, U.S, REUTERS, White, AAA, Standard, Democratic, Republican, Treasury, Advisory Services, ” Treasury, Fitch, AA, Queens ' College, Thomson Locations: Washington , U.S, States, United States, Atlanta, New York, Bengaluru
China's growth model is no longer suited to the global economy, Mohamed El-Erian said. Exports have fallen, and growth in Europe and the US will likely be muted for the foreseeable future, he said. After an initial burst of first-quarter growth, China's industrial output, investment, and consumer activity have all cooled sharply. "First, as the most recent trade data show, the global economy no longer supports China's domestic growth dynamics," El-Erian said, noting that Chinese exports in June dropped 12.4% and imports declined 4.1%. Rather than hope for the rest of the world to save China's economy, El-Erian suggested that Beijing look inwards and re-orient political policy towards an effective growth model.
Persons: Mohamed El, Erian Organizations: Service, Syndicate, Allianz, Local Locations: Europe, China, Wall, Silicon, West, Beijing, El
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailPeople are being pulled in by 'a very strong soft landing narrative', says Mohamed El-ErianMohamed El-Erian, Allianz chief economic advisor and president of Queens' College, Cambridge, joins 'Squawk Box' to discuss why the markets are being propelled by the relief over what has not happened, the Fed's rate hike campaign, and more.
Persons: Mohamed El, Erian Mohamed El Organizations: Erian, Allianz, Queens ' College , Cambridge
US inflation fell to a two-year low of 3% in June, dividing experts on whether the threat is over. Top economist Steve Hanke said the headache is gone and the Fed has things under control. Paul Krugman was less convinced, while Mohamed El-Erian noted a recession could still hit. Even if inflation is on the retreat, interest rates may need to remain high to prevent a resurgence, Krugman continued. El-Erian's comment raises the prospect that inflation could rear its head again, forcing the Fed to keep hiking rates and trigger a recession.
Persons: Steve Hanke, Paul Krugman, Mohamed El, Erian, stoked, aren't, Johns Hopkins, Ronald Reagan, Hanke, Krugman Organizations: Service, Reserve, CNBC, Princeton, MIT, Phillips, Fed Locations: Wall, Silicon
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailMohamed El-Erian: Not seeing goods disinflation 'immediately translate' to the service sectorMohamed El-Erian, Allianz and Gramercy advisor and president of Queens' College, Cambridge, joins 'Squawk Box' to preview June's CPI data, what it means for the Fed's rate hike campaign, and more.
Persons: Mohamed El, Mohamed Organizations: Erian, Allianz, Gramercy, Queens ' College , Cambridge
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe U.S. economy is much more resilient than people are willing to acknowledge: Mohamed El-ErianMohamed El-Erian, Allianz chief economic advisor and president of Queens' College, Cambridge, joins 'Squawk Box' to discuss the Fed's rate hike campaign its impact on the U.S. economy, China's economic recovery, and more.
Persons: Mohamed El, Erian Mohamed El Organizations: Erian, Allianz, Queens ' College , Cambridge Locations: U.S
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailPowell's message to markets was 'confused and confusing': Allianz's Mohamed El-ErianMohamed El-Erian, Allianz and Gramercy advisor and president of Queens' College, Cambridge, joins 'Squawk Box' to discuss his problem with Jerome Powell's message to the markets, the Federal Reserve's data dependence, and more.
Persons: Allianz's Mohamed El, Erian Mohamed El, Jerome Powell's Organizations: Erian, Allianz, Gramercy, Queens ' College , Cambridge
The Fed pressed pause on its interest-rate increases this month after boosting borrowing costs 10 times since early 2022. The move spurred a wave of commentary given the central bank at once held rates and signaled more hikes. "It seems like the unanimity of opinion that we need more rate hikes has been clear, but the path of rate hikes is all over the place," he added. "It was what I would call, an awkward but hawkish pause," he added. Peter Schiff, chief global strategist at Euro Pacific Capital"Don't believe the hype on the Fed's hawkish pause on rates.
Persons: Larry Summers, Mohamed El, David Rosenberg, Jeff Gundlach, , Jerome Powell, Summers, Erian, Tom, Dick, Harry, " Rosenberg, Gundlach, Steve Forbes, Forbes, Don't, Richard Clarida, they've, they're, Clarida, Whitney Watson, Watson, Peter Schiff, Schiff Organizations: Fed, Service, Federal Reserve, Bloomberg, Erian, Allianz, CNBC, Federal, Global, Goldman Sachs, Euro
Mohamed El-Erian said the Federal Reserve's latest policy communication was seen as "confused and confusing." The Fed left interest rates unchanged at its Wednesday meeting, but signaled future increases. In a tweet on Thursday, the top economist said the central bank's policy communication this week was seen as "confused and confusing," and shared tweets echoing a similar sentiment from journalists and experts including economist David Rosenberg. "A sample from quite a set of reactions to what is seen as confused and confusing Fed communication," El-Erian said in the tweet, accompanied by three critical observations the Fed from market commentators including Rosenberg. The Fed has been on an aggressive path to cool inflation over the past year, hiking interest rates by 500 basis points to a range between 5%-5.25%.
Persons: Mohamed El, Erian, , David Rosenberg, Jerome Powell, Rosenberg, Powell, Summers Organizations: Federal, Service, Rosenberg Research, Bloomberg
The Federal Reserve is set to announce a critical policy decision today — hike (possibly), pause (likely), or cut (probably not). The Fed has made 10 consecutive rate hikes leading up to today, making for one of its most aggressive tightening campaigns ever. Tuesday's cooler-than-expected inflation data is still double the Fed's 2% target, which suggests there could be more hawkishness ahead. Meanwhile, Wharton professor Jeremy Siegel suggested in a separate note that the Fed may actually be done with policy tightening altogether. He explained that, since he doesn't see a recession, the stock market could actually rally higher across all sectors because of investor FOMO.
Persons: Jerome Powell, David Bahnsen, Mohamed El, , Christopher Waller, Wharton, Jeremy Siegel, Powell, Goldman Sachs, David Solomon, Tom Lee, FOMO, Read, Warren Buffett's, they're, Qatar's Sheikh Jassim, Jim Ratcliffe, Max Adams, Hallam Bullock, Nathan Rennolds Organizations: Federal, Reuters, Bahnsen, Reserve, Spar Group, Capital Economics, Berkshire Hathaway, Manchester United Locations: New York, London
Oil prices climbed Tuesday as China tries to boost growth amid a disappointing post-COVID rebound. The People's Bank of China unexpectedly trimmed its short-term lending rate. US inflation data also raised hopes on Wall Street for a pause in Fed rate hikes. The People's Bank of China unexpectedly trimmed its short-term lending rate and deposited 2 billion yuan into the banking system, which suggests policymakers' growing urgency to stoke the economy. China's policy loosening comes as fresh inflation data in the US raised hopes on Wall Street that the Federal Reserve will pause its rate hikes.
Persons: , Brent, Mohamed El Organizations: People's Bank of, Service, Texas Intermediate, Federal, Traders, Financial Times Locations: China, People's Bank of China, stoke, Mohamed
Collectively, the five companies have raised their market cap by about $2.9 trillion in 2023 — contributing 96% of the almost $3 trillion gains in the S&P 500's market value this year, Fortune reported on Wednesday. Read further to know the five bigwigs' market capitalization — or marcap — gains this year, in descending order:1. Apple: $718 billion in marcap gainsThe world's largest company by market cap, Apple shares ended 2022 at $129.93 apiece. On Tuesday, the chipmaker's market cap briefly hit the coveted $1 trillion mark for the first time. This takes Amazon's market cap to $1.25 trillion — up from $857 billion at the end of 2022.
Persons: Fortune, Insider's Zahra Tayeb, Mohamed El, Read, Tim Cook, Cook, CNBC's Steve Kovach, Bing, Jensen Huang, Huang, Sundar Pichai, Pichai, Andy Jassy Organizations: Apple, Microsoft, Nvidia, Nasdaq, Allianz, Big Tech, CNBC, Wall, OpenAI, Bloomberg, Amazon Locations: California, Nvidia's
Investors are losing hope that the Federal Reserve will pause its interest-rate hikes in June. For example, several market experts have warned the commercial real estate industry is at risk if the Fed keeps raising borrowing costs. "But I do think it's possible they're going to raise a little more. Ed Yardeni, market veteran"The market has been remarkably resilient, mostly because the economy has been remarkably resilient," Yardeni said in a CNBC interview. "So I think they're where they want to be – and I think they're going to keep it here."
Persons: They're, , Mohamed El, David Solomon, Goldman Sachs, Solomon, It's, Jamie Dimon, Dimon, Ed Yardeni, Yardeni, Doom, Roubini, Mark Zandi, Zandi, Mark Nash, Nash Organizations: Federal, Service, Bank, Signature Bank, First Republic, Fed, Erian, Allianz, CNBC's, JPMorgan, CNBC, Bloomberg, NYU Stern, Jupiter Asset Management
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