Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Jobs, El-Erian U.S. Structural Issues Aren't Being Dealt With

Economics / US Economy Feb 03, 2012 - 10:06 AM GMT

By: Bloomberg

Economics

Best Financial Markets Analysis ArticlePIMCO CEO and co-CIO Mohamed El-Erian spoke with Bloomberg Television's Betty Liu, Scarlet Fu and Dominic Chu this morning about today's jobs report and the global economy.

On jobs, El-Erian said that "let's not also forget the numbers outside these headlines...we should not lose sight that we have structural issues that are not being dealt with."


Also, "my gut says we are likely to see [QE3], but the question is when and how big."

El-Erian on today's jobs report:

"It is a strong report. We should welcome in job creation of 243,000 and welcome unemployment rate of 8.3%. But the qualifier, and it is an important one, is let's not also forget the numbers outside of these headlines. I look at long-term unemployment, those that have been unemployed for 27 weeks or longer, that is stubbornly stuck at 5.5 million, and second, youth unemployment is stuck at 23%. We should welcome the headline numbers. They are really good, but we should not lose sight that we have structural issues that are not being dealt with. That's going to be the question mark. Is this just a cyclical bounce or can this hand off into a secular bounce, which the economy needs?"

On Bill Gross saying it's a risk-on trade:

"It is a short-term risk-on trade. Markets are dominated these days by short-term trade for good reason. There are so many uncertainties about the global economy. People are not clear what Europe is going to look like, and whether you get the political response the American economy needs. A lot of investors have lost long-term conviction and are now focusing on the very short term. It is a risk- n trade in the short term, and in the longer term we will have to deal with these issues confronting the global economy and therefore markets."

On what the jobs report means for QE3:

"So far, the Fed has been dismissing the short-term data...They have been looking beyond the cyclical bounce, and saying that secularly the economy is still weak. What does it mean for policies, don't expect any change in the signal that they intend to keep interest rates float at 0 or at exceptionally low levels until the end of 2014. In terms of QE3, my gut says we are likely to see it, but the question is when and how big."

"We need this handoff in two places in particular. First, hand off from short-term growth that is prompted by stimulus. We have massive liquidity pumped into the system. We have a savings rate that has come down from over 6% to 4%. These are all short-term effects. We need to hand off to a long-term engine of growth, and secondly, we have to remove uncertainties like Europe, the Middle East, and Iran. We need these two hand offs, and critically so far, it is a good cyclical story, but the structural and secular story remains worrisome."

On whether America needs a payroll tax extension:

"This economy does not have enough indigenous growth. First, the savings rate for households has come down to 4%. There's a limit to how far down you can bring it. Second, the rest of the world is slowing. Third, business investment is only going to happen if businesses are convinced that we have this sustainable bounce. Therefore, if the government takes away too much too quickly, we will lose momentum."

On where the global economy is headed:

"It is very balanced right now. It is what we have called here at PIMCO the morphing into bimodal distributions -- the two ends of the distribution of potential outcomes is high. I would look in the short term critically to Europe. The ECB has managed to press the pause button on the European crisis using a very powerful tool, the LTRO, and we have a second one coming up. The question is can other European entities press the rewind button to bring the crisis back? That is the main issue to look at. Keep an eye also on small things -- Portugal, the Greek PSI discussion, they can press play again. So, focus on the very short term on Europe, on the longer term, position for the reality that we are living in this bimodal world."

bloomberg.com

Copyright © 2012 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in