El-Erian thinks the the U.S. economy is getting weaker again and that the Fed will be hinting that they are still prepared to step back in and do more to support growth.
According to El-Erian, the language from the Fed may turn from, "We are taking our foot off the gas pedal" to "we are keeping our foot on the gas pedal and are prepared to do more."
He also thinks that the fundamental data from Europe is worse than what the markets are suggesting.
The main risk of Fed Intervention according to El-Erian is that it circumvents the price mechanism and that money flows to places it shouldn't. This results in assets being priced at artificial levels.
According to El-Erian, the language from the Fed may turn from, "We are taking our foot off the gas pedal" to "we are keeping our foot on the gas pedal and are prepared to do more."
He also thinks that the fundamental data from Europe is worse than what the markets are suggesting.
The main risk of Fed Intervention according to El-Erian is that it circumvents the price mechanism and that money flows to places it shouldn't. This results in assets being priced at artificial levels.
