- Mohamed El-Erian criticized the Fed’s narrative of transitory inflation in an interview with Bloomberg on Friday.
- “You can’t simply dismiss them as transitory,” he said. “It is going to go down in history as one of the worst inflation calls.”
- Recent data show US inflation is running at its fastest rate since 1990.
Mohamed El-Erian, chief economic adviser at Allianz SE, criticized the Federal Reserve’s long-standing narrative of transitory inflation on Friday following data that revealed prices are rising at the fastest rate since 1990. “There are lots of structural changes going on in the post-pandemic economy … you can’t simply dismiss them as transitory,” El-Erian told Bloomberg in a TV interview on Friday. “So it is going to go down in history as one of the worst inflation calls by the Federal Reserve.” The Consumer Price Index gained 0.9% in month-over-month in October, the Bureau of Labor Statistics said Wednesday, far higher than economists’ expectation of 0.6%. The reading marks an acceleration from the 0.4% gain seen in September and the largest one-month jump since 2008. Year-over-year, inflation at 6.2% is the highest in 30 years. But what makes the latest reading different, according to El-Erian, is the breadth of price growth, which rose faster across almost every category tracked by the Labor Department.
UBS ran a simulation that shows stocks could lose up to 50%
Fears of stagflation escalated on Wall Street after another hotter-than-expected inflation report this past week, and UBS said stocks could lose up to half of their vluee if this condition persisted over the long term. NN: they should consider themselves very very lucky if stocks only lose 50% of their values….. Try 90% and 25 years to recover after they rig the game and kick out the loser stocks…