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El-Erian - Fed Can and Will Act, but More Is Needed

September 10, 2012 | About:
Dheeraj Grover

Dheeraj Grover

18 followers
PIMCO's CEO Mohamed El-Erian was on Bloomberg to discuss monthly jobs report for August and what that means for the U.S. economy and the Fed's further easing action going forward.

-- Jobs numbers for the month of August were not good and that makes the case for QE3 coming sooner than later - in September or December.

-- Why? Including August jobs numbers average numbers of jobs created in the last three months have fallen below 100,000. That is a very low number. There is no growth in hourly earnings, labor participation has gone down further and finally teenage unemployment has went up close to 25%. Combine all these together and it points to a need for strong policy response from Washington and the Fed.

-- What you will get is a response from the Fed only, as Congress is so polarized.

-- Treasuries or Germany bunds, both flight to safety, which has a better outlook - Treasuries as Fed is going to buy them, what ECB is doing buying peripheral bonds and not bunds.

-- ECB's bond-buying program has reduced the risk of euro zone breakup in the short term.

Credit and Source: Bloomberg, www.bloomberg.com

Here is the video:

http://bloom.bg/P82wA6

About the author:

Dheeraj Grover
I am an individual investor with deep interest in the field of value investing. My ideas and thinking is inspired by highly respected value investors like Ben Graham, Warren Buffett, Walter Schloss, Bill Ruane and Tweedy Browne

Rating: 3.4/5 (5 votes)

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