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Hard landing still a risk, Mohamed El-Erian says soft landing odds 55%
Hard landing possible, reiterates his view that Jay Powell was more dovish than markets had expected, says there is still only a 55% chance of a soft landing. https://youtu.be/-8V5tm8-qRg?si=G1EXAaiMh-w5NPCg Notes: Following up on his op-ed in the FT, El-Erian argues we will see more volatility following Jay Powell’s Johnson Hole
Jim Bianco says we are not headed back to 2%, fed is misjudging the economy
Jim Bianco thinks the economy is too strong for a soft landing, inflation has been bottoming. https://youtu.be/nfV9JsOvG9c?si=PAa3_a863Eyn-Idi Notes: On CNBC, Wasn’t surprised by Powells speech because it confirmed what the market was expecting – rate cuts in September. The takeaway is we don’t know how far they will go
Komal Sri-Kumar says the fed is misjudging, labor market is fine and inflation remains a risk
Komal Sri-Kumar says the labor market is ok and the fed is making a mistake by cutting, inflation not at target. Speaking on CNBC, Sri-Kumar said he thinks the labor market is not weak. Cited 114 jobs created in July and noted that the April jobs data showed a 108k
Larry Summers says we may escape “inflation episode” without a major recession
Although Larry Summers remains critical of the fed’s initial response to inflation, says they didi the right thing and we may not have a recession. Larry summers, who has been critical of the feds slow response to inflation in 2021, talked about Jay Powell’s Jackson Hole speech. Said of
Fed rate cuts in 2024 remain uncertain: El-Erian says the market is pricing in too many cuts
Mohamed El-Erian thinks the bond market is pricing in too many fed rate cuts in 2024 and in the next 12 months. Speaking on Bloomberg surveillance, Mohamed El-Erian repeated his arguments that the fed needs to stem erosion of the “3 anchors of stability.” Said here has been a narrative
Jeremy Grantham says “most vulnerable market there has ever been, should give you cause for some concern”
Jeremy Grantham still has the view that we are in a bubble, says that he has been early calling every bubble in his career. On current market situation: “The draw down in early 2022 was the worst since 1929 – and then in November 2022 chat GPT comes out and
El-Erian says fed needs to regain control at Jackson Hole to avoid market volatility
El-Erian believes the fed must cover key policy areas at Jackson Hole to avoid more future market volatility. Writing in Bloomberg, El-Erian says the Fed’s Jackson Hole meeting comes amid “erosion of 3 anchors of stability,” including economic growth, “effective” policy guidance and technical vulnerability as the result of pockets
Rebecca Patterson on the cary trade, warns just 50% chance of a soft landing
Rebecca Patterson says soft landing is still 50%50%, retail may play a role in cary trade Speaking on Bloomberg survallance, Patterson said it makes sense to listen to the investment banks such as JPMorgan, which said the cary trade is mostly done. A few other banks have said similar. Says
Rebecca Patterson warns we don’t yet know what kind of landing we will have, rate cuts will take time to feed through economy
Rebecca Patterson says not clear what kind of landing we have, worries that rate cuts may take time to work through the economy. Speaking on Bloomberg The Close, Patterson noted that economic data was mixed, with NFIB survey data better than expected and small business hiring plans remaining steady. However,
El-Erian thinks risks to employment are higher than risks to inflation, but fed cut will be 25bps
El-Erian thinks the employment situation is vulnerable, but the fed sees them as balanced. Mohamed El-Erian, speaking and writing on Bloomberg, has been warning for some time that the fed may be behind the curve and that the labor market has been weakening. Surprised by the speed with which
Nouriel Roubini sees surprising economic strength
Nouriel Roubini, speaking on Bloomberg, discussed his recent paper accusing the treasury of manipulating bill sales to ease financial conditions. Believes the economy may be stronger than people think. Roubini said markets are getting nervous about recessions, but markets have “predicted 10 of the last 3 recessions.” He continued that
El-Erian says BOJ gave the signal to put the carry trade back on
Speaking on Bloomberg and explained in his column, El-Erian believes the BOJ has hit the “rewind” button on the carry trade unwind rather than the “pause” button, thus setting up further problems down the road. Elaborating on why the BOJ, El-Erian responded “no one wants to be the volker moment.
El-Erian ơn Bloomberg: Fed should not react to markets with rate cut
Writing in Bloomberg, El-Erian makes the case that the dfed should not react to market volatility by signaling a larger or even a emergency meeting cut. El-Erian enumerates possible reasons for recent market volatility, including 1) Recent economic weakness 2) that rates are too high 3) crowded positioning 4) geopolitics
El-Erian thinks the economy is slowing fast
Speaking on Bloomberg, El-Erian says that the economy is slowing faster that the fed anticipated, and that the fed should be cutting rates. Says that the fed should not start with a 50bps cut because it would signal a mistake, but says that the fact that people are talking about
7/24 El-Erian on what the fed should address at Jackson Hole
Writing in the FT, Mohamed El-Erian again called for changes to the fed to make changes. The changes include a long list which El-Erian has largely touched on before, including: a reexamination of why the fed’s forecasts have been so wrong, 2) Developing a strategy instead of relying on short-term
Finance gurus are warning risks to inflation and stock markets remain in 2024
Weekly summary of commentary from Finance Gurus on the stock market and more
Larry Summers on WSW: Deficits are now a serious problem
Speaking on Wall Street Week, Larry Summers said that budget deficits are not much more serious than in the early 1990’s. Summers noted that government debt then was about 30% of GDP, while now it is above 100% Noted that deficits are now likely to be 10% of GDP, and
Dalio on LinkedIn: 2024 will be a pivotal year, risks to markets not priced in
Dalio posted a new in-depth article on Linkedin Says that market pricing is currently in-line with ‘fundamentals,’ but does not take into account risks such as US elections, international conflicts and climate change. Believes that in 2024, inflation will be higher than market expectations, growth will be lower, and interest
Dalio says markets neither attractive nor unattractive, but geopolitical risks not priced in
Speaking from Davos, Ray Dalio said that the inflation rate going forward is likely to be 3%-3.5%, and that a 4% bond yield is therefore probably not attractive enough. Dalio mentioned that markets do not appear to be cheap, and that he does not believe geopolitical risks are priced in.
1/15 El-Erian in the FT: More reasons to be cautious about inflation last mile
Writing an Opinion in the FT, Mohamed El-Erian reiterated some of his earlier points about the last mile of inflation. El-Erian noted that the US has continued to outperform other developed economies internationally. However, El-Erian warned that reaching the Fed’s 2% inflation target in the near term was unlikely and
El-Erian warns disinflation will not continue, sees cost pressures build
Speaking on Bloomberg, Mohamed El-Erian said that he does not expect disinflationary trends to continue, citing 2 cost-push pressures. First, El-Erian cited restricted shipping in the Red Sea driving container costs up and restricting supply of key products. Secondly, El-Erian cited tight labor markets and high wage pressures. El-Erian sees
Ackman stays long 1-year and 5-year treasuries, says fed will cut at least 75bps
Ackman said that he was staying long sort duration bonds, including the 1-year and 5-year. He mentioned that he had tweeted that the 30-year had gone far enough when it reached 5%, but did not mention investing in longer-duration. Ackman mentioned that he believes the fed will cut ay
Tudor Jones sees recession on the horizon, grinding reality of the fiscal situation
Speaking on CNBC, Paul Tudor Jones said that its a “difficult time to be an investor in us stocks,” citing uncertainty in geopolitics and the US fiscal situation. Jones noted that the fiscal situation is likely to be different than other “cataclysmic events” in that it is slow moving and
Roubini warns low interest rates are over, “entering a period of great stagflation”
Speaking on Bloomberg, Nouriel Roubini predicted that inflation would stay above 2% arguing that “the great moderation is over” and citing both supply and demand side factors. On the supply side, Roubini cited a litany of reasons including de-globalization, aging population, climate change, geopolitical conflict and backlash against inequality. On
El-Erian not worried about December inflation, but next few “could be particularly interesting”
El-Erian believes this CPI report will show inflation coming down, but sees risks of inflation remaining sticky or accelerating in the next 3 months. Drivers of sticky or accelerating inflation could include further disruptions to supply chains, limited additional goods disinflation along with above target services inflation, and less