Mohamed A. El-Erian Re-poster

"I actually want to keep you where you are."

President Trump just made this comment regarding NEC Chair Kevin Hassett, who is one of the leading candidates to replace Jerome Powell as Chair of the Federal Reserve. Consequently, this development has driven the probability of Kevin Warsh being nominated to 60% in prediction markets.
#economy #federalreserve #markets

**On Global Trade and Investment:**

The discussion this morning centers on shifting alliances and determining who is being pushed into whose arms.

On one hand, some interpret the announcement of a new Canada-China “strategic partnership” as a symptom of what the Financial Times describes as “Trump is making the world fall in love with China.”

On the other hand, motivated partly by China-related issues, the US and Taiwan have announced an agreement to bolster investments in America. This measure includes capping American tariffs on Taiwanese goods at 15% (and 0% for select products).

#economy #trade #investment #markets

According to Bloomberg, “Global credit markets are running at their hottest in two decades.”

Amid a resilient economic outlook, yield premiums on corporate debt have narrowed to 103 basis points, marking the lowest level since June 2007.

#economy #markets #bonds

It has been a tough day for oil as, once again, this segment is proving to be the most sensitive to fluctuating geopolitical headlines. This stands in stark contrast to the notably low volatility currently seen in rates and FX.

#economy #oil #markets

Insights on how to navigate the feud between the Trump Administration and the Powell Fed.

https://www.project-syndicate.org/commentary/trump-powell-feud-offers-opportunity-to-reaffirm-fed-independence-and-promote-reform-by-mohamed-a-el-erian-2026-01

#economy #markets #federalreserve @ProSyn

Germany’s growth numbers for 2025 are in, and there is good news: the economy has expanded for the first time since 2022. Nevertheless, the 0.2% growth rate remains low in both absolute and relative terms. This illustrates the need for Germany (and the broader EU) to progress further in implementing pro-productivity/growth reforms.
#economy #markets #growth #germany #europe #eu

Regarding the international dimensions of recent US Federal Reserve developments:

It comes as no surprise to see key central bank governors rallying in support of the Fed’s independence, as highlighted in their joint letter. Given the "demonstration effect" of the US, institutional independence is essential for both global economic stability and the effectiveness of central banks. However, this independence remains inherently fragile, particularly regarding the "democratic deficit"—the tensions that arise from granting significant power to unelected officials.

Equally unsurprising is the pushback from domestic politicians in some of these nations. In New Zealand, for instance, the RBNZ Governor was rebuked for commenting on US domestic politics and was advised to "stay in her lane."

#centralbanks #federalreserve #economy #markets

The data releases for November—which were delayed by the government shutdown—arrived this morning and reinforce two existing hypotheses:

1. Consumer demand remained resilient in Q4; and
2. A data-dependent Fed will find support for the view that it is “well-positioned to wait” before cutting rates.

Specifically:
* **Retail Sales:** Rose 0.6% in November (beating expectations), with the "control group" expanding by 0.4%.
* **PPI Inflation:** November annual headline PPI stood at 3%, while core PPI reached 3.5%.

#economy #markets #inflation #retailsales

China’s trade figures for 2025 are officially in. The nation’s trade surplus reached a record $1.2 trillion, as the decline in exports to the U.S. was more than offset by increased shipments to other countries (please see FT charts below)—some of which are expected to push back harder this year.
#wconomy #markets #trade #China

Good morning.

Today's early price action features record highs in Asian and European equities, as well as gold (see below), silver, and copper.

#economy #markets #stocks #gold #silver #copper

In case you missed my earlier post:

Here are my insights on why unanswered economic and financial questions from 2025, alongside new developments, call for a recalibration of market and policy approaches: https://project-syndicate.org/commentary/2026-outlook-investors-policymakers-will-need-to-recalibrate-by-mohamed-a-el-erian-2026-01 #economy #markets
@ProSyn

According to charts from Apollo’s Torsten Slok, there is a notable divergence within the S&P 500. Ten companies now account for a record share of total market capitalization. Furthermore, the overall index is soaring, even though the number of individual stocks hitting new highs remains limited.

#markets #stocks #investing #investors

Today marks the arrival of the US CPI inflation data. Consensus forecasts anticipate monthly price increases of 0.3%, with annual headline and core measures standing at 2.7%. The immediate policy relevance of this release has grown following last week’s jobs report, which notably offered "something for everyone." An outcome broadly consistent with these forecasts would reinforce the view that the Fed will keep rates on hold. Indeed, it would take a significant downside surprise in these inflation figures to put a rate cut back on the table for the upcoming Fed meetings.
#economy #inflation #federalreserve #markets

Good morning.
It is another day of Japanese Yen weakness, coupled with rising yields.
This combination has persisted for some time now; it is worrisome and historically unusual for a G-7 economy:
The Japanese currency has depreciated again this morning, nearing 160 per US dollar, even as 10-year yields have risen 6 basis points (please see below).
#economy #markets #Japan

Sharing my perspective on why the unresolved economic and financial questions from 2025, combined with new developments, necessitate a recalibration of market and policy approaches:

https://www.project-syndicate.org/commentary/2026-outlook-investors-policymakers-will-need-to-recalibrate-by-mohamed-a-el-erian-2026-01
#economy #markets @ProSyn

Following the revelation of a dramatic escalation between the Administration and the Federal Reserve, the economic, institutional, and political spotlight on the Fed has arguably never been more intense.

Former policymakers from both Democratic and Republican administrations have voiced their concern regarding the situation. Meanwhile, some sitting politicians have signaled their intent to block all Fed nominees—including the scheduled May replacement for Chair Powell—until this issue is fully resolved.

However, after a brief initial reaction, the markets appear to have largely shrugged off the news for the time being. The S&P 500 achieved a new record high amidst broad equity market gains, while both yields and gold have retraced the movements seen earlier this morning.

#economy #markets #federalreserve

Axios highlights the widening household divide in the US economy:
"The nation is splitting into three distinct economic realities: the Have-Nots (stalling) ... the Haves (coasting) ... and the Have-Lots (rocketing to greater wealth)."
#economy #markets #inequality @axios

We need to keep a close watch on three emerging issues. If these are managed poorly, they could create significant headwinds for the two primary engines of global growth: the US and China.

**US Affordability Policies:**
Proposed measures designed to improve affordability run the risk of inadvertently limiting credit availability for low-income households and reducing the availability of mortgages.

**The Federal Reserve Investigation:**
While the Fed certainly needs reform—balancing the crucial issue of central bank independence with stronger accountability—a mishandled process risks derailing appointments and undermining the effectiveness of future policy.

**China’s Energy Vulnerability:**
Actual and potential volatility in the volume and price of China’s oil imports from three specific countries (Iran, Russia, and Venezuela) risks slowing the Chinese economy at a time when its growth engines require structural reform.

#economy #markets #affordability #federalreserve

Good morning.

Early market conversations today are dominated by last night’s news regarding the Federal Reserve investigation and Chair Powell’s defiant response (please see yesterday’s posts).

Regarding early market activity, stock futures are trading lower and government bond yields are higher (below), gold remains above $4,600, and the dollar index has depreciated by 0.4%. The 2s-10s curve, which we should also keep an eye on, is 2 bps steeper.

#economy #markets #FederalReserve

Jets fans, we have the choice to either laugh or, more probably, shed a few more tears. Two of our former quarterbacks are appearing in the playoffs, and a former head coach has just helped engineer the 49ers' playoff upset. The grass really does seem greener.
#jets @nyjets @NFL #WildCardWeekend @sanfran