Need to Know: Fed is out of touch with markets, warns Mohamed El-Erian
Wall Street is looking up as markets shake off a skid on Wednesday, triggered by Fed Chairman Jerome Powell, who said inflation was “transient” or temporary, at an otherwise dull meeting.
What the market believes, he says, is that a “Powell Put” will keep propping up elevated assets and growing debt and leverage. And that “put” refers to the belief that the central bank will step in to keep the bottom from falling out of markets.Because markets reveal themselves to be entirely dependent on the Fed to be dovish 100% of the time?A market beholden to central committee planning. https://t.
“The Fed is counting its lucky stars at the moment, having the benefit of ongoing subdued inflation readings. But it’s far from a relaxed state, as it knows full well that inflation is coming and when it does, things will be significantly more challenging, as it will then need to be thinking about a balance of risk that necessitates higher rates...not lower,” said Kruger.
“Diversification and a desire for safe, liquid assets were the main drivers of buying here,” said the industry body, in a press release Thursday.Earnings Chemical giant DowDuPont DWDP, -2.96% and its spinoff Dow DOW, -1.06% health services group Cigna CI, +1.99% and cereal maker Kellogg K, -1.51% are the big names reporting ahead of the open. U.S. Steel X, -2.12% , travel group Expedia EXPE, -0.79% and videogame publisher Activision ATVI, +0.73% will report after the close.
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