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
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

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