Tech
What’s Next For The U.S. Economy: Mohamed El-Erian
Mohamed El-Erian, chief economic advisor at Allianz, says the stock market is in a “win-win” mindset as the Federal Reserve provides continued stimulus. He warns of distorted “zombie markets” and explains how some sectors will benefit while others will miss out during the economic recovery.
Beware not just of “zombie” companies but of “zombie markets” as asset prices become distorted and detached from fundamentals, warned Allianz chief economic advisor Mohamed El-Erian.
“I think we’ve got to be careful about zombie markets,” he said. “We’re not there yet, but we’re starting to get close.”
“Zombie” companies continue to operate by borrowing money, even though they are unable to pay off their debts. Record low-interest rates have contributed to a growing number of such firms over the past decade.
“They eat away at the dynamism of an economy, they misallocate resources and they eat away at productivity,” El-Erian said. “So you may be keeping them alive today, but it comes at a cost.”
El-Erian said “zombie markets” might occur when central banks like the Federal Reserve continue to prop up assets, destroying the market’s ability to allocate capital efficiently.
“Zombie markets are markets that are completely mispriced, they’re completely distorted,” El-Erian said. “Why? Because there is a policy view that you need to subsidize everything in markets for now.”
The Fed has taken extraordinary steps, including pledging to buy corporate debt and unlimited amounts of Treasurys, to keep the financial system running smoothly during the coronavirus recession. On Monday, the central bank said it would expand its purchases in the credit market to include individual corporate bonds.
The Fed’s aggressive actions have helped stocks recover from big losses earlier this year when the coronavirus pandemic started to spread across the U.S. The S&P 500 has surged nearly 40% since March 23, when the Fed first announced it would buy corporate bonds, even as parts of the economy came to a standstill and unemployment surged.
El-Erian said the Fed’s actions have created a “win-win” mentality in the stock market, as many traders expect the central bank will continue to buy assets including equities in order to prevent a financial crisis.
“The mentality of the market is if they’re willing to do high yield, they’re willing to do equities, because after all, the last thing the Fed wants is a financial crisis to make the economy worse,” he said. “The market feels very strongly that it basically is holding the Fed hostage.”
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What’s Next For The U.S. Economy: Mohamed El-Erian
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A leak by Indian supplier Tata Electronics, purportedly of the yet-to-be-released iPhone 18 Pro models, has become marketing gold for the Chinese government. The Communist Party paper, The Global Times, is using the leak – caused by a cyberattack – as a cautionary tale for Apple and other American companies that are in the process of diversifying their supply chains away from China. CNBC’s Eunice Yoon reports.
00:58 Correction: The location tag should be Beijing, China.
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China’s Swagger After India’s iPhone 18 Leak
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Senior Director of Video: Jeniece Pettitt
Animation: Jason Reginato, Emily Park
Additional Footage: Cerebras, D-Matrix, Getty Images, Intel, Nvidia, OpenAI, SpaceX, TSMC
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January 14, 2024 at 10:28 am
Do you agree with Mohamed El-Erian? Is there someone else you’d like us to interview for What’s Next? Subscribe to CNBC and let us know what you think in the comments below.
@farzanabibi1164
January 14, 2024 at 10:28 am
Good morning
@gardenbounty4498
January 14, 2024 at 10:28 am
El Erian is a pontificator. He's a master bullshitter and he's famous for being famous. He doesn't have any money and doesn't have a clue how to grow it.
@harlyslamm2888
January 14, 2024 at 10:28 am
This guy is a fool! Her has been pessimistic yet the markets are up 100%, but i hope nobody listens to him otherwise your portfolio will go to zero
@faisalhaneef5954
January 14, 2024 at 10:28 am
He has been wrong wrong wrong wrong….
@stevesimms5775
January 14, 2024 at 10:28 am
Don't believe what Mohamed el-erian says. Last April he predicted a market crash a few weeks later. And what happened? Market reached all-time high since then. Do not invest based on what he says.
@Clubrat
January 14, 2024 at 10:28 am
So many people in trouble. The one thing I want for Christmas is an end to this stimulus crack so we can deflate back to normal and give the small guy an opportunity into the next boom. And as a bonus get rid of these zombies.
@smithzlantan4599
January 14, 2024 at 10:28 am
Just do something that will make you money whilst you sleep, no matter how little. This pandemic has been a perfect eye opener for us all to really see how life can be without your usual income stream. It's recommendable for you to have a side hustle. The best thing you can do for yourself is to find a way to make money even while sleeping especially now we have to work and earn from home, Having different streams of making money is the solution to survive. And I've been doing that by investing in the stocks, bitcoin and dividends. I've earned impressive profits I can't mention here working with Mr. Young through his registered investment company. Kindly reach out to him via email linyoun56g@gmail or via
Instagram @you_ngli .The rich see an economic crisis as the perfect time to invest, they're a step above others because they see an opportunity where others don’t
@kyounghohan5211
January 14, 2024 at 10:28 am
There are lots of zombies in the world.
@juanluistostadocanales3955
January 14, 2024 at 10:28 am
Clarity and common sense.
@jay9220
January 14, 2024 at 10:28 am
Yes, zombie markets will arise when FED's action won't help the market.
@senthilkumarn4u
January 14, 2024 at 10:28 am
Wonderful interview…
@hassanyakubu7362
January 14, 2024 at 10:28 am
Unbelievable results!! This has been an incredible experience from day one with mr Charles @Charles_forex09 at InSTA.. This wasn't my first time trading but honestly I didn’t know what to expect when I first joined. After much loss. God walked me through the entire process from start to finish, which was a HUGE plus! They made the entire process so easy and hassle-free! I’m very impressed! Go to him @Charles_forex09 I will definitely be referring him to you all..
@mdabdulwahhaab
January 14, 2024 at 10:28 am
she is beautiful
@DipakBose-bq1vv
January 14, 2024 at 10:28 am
He is saying what we all know.
@r6racer53
January 14, 2024 at 10:28 am
Lies lies lies, this is the residual aftermath of crony capitalism. All of this has been planned years ago as we move into Agenda21. Next the system will crash causing us to move to a digital currency that just happens to be the new world currency as we now merge into a one world government.
@radhakrishna1845
January 14, 2024 at 10:28 am
Great…. World without Crony Capitalism….
Humans lived happily without money for thousands of years…
Mother Nature provides everyone with their needs… But not their greeds….
Restructure fundamental principles of economy in such a which is for all..
No Rich… No Poor…
All all are blessed…
@Effse
January 14, 2024 at 10:28 am
Trump has predestined the death of the economy and people working. We are dying of cancer. The type of cancer is Donald trump.
@jameshines6474
January 14, 2024 at 10:28 am
The USA has been held cap[tive since 1913 in a coupe imposed on America by the Rothschild Bankers. These Terrorist bankers did the same to Czar Nicholas & his family in 1913. This will not end until we have another American Revolution. Same for Russia. This event occurring is much closer than the bankers realize.
@nguyendinhtruongbinhreview129
January 14, 2024 at 10:28 am
avengers trailer
@HIRED7DAYS
January 14, 2024 at 10:28 am
"The better off we feel???…..so the feds side hustle is psychiatric?…
@fruitloops3718
January 14, 2024 at 10:28 am
What we have is not capitalism. We have crony capitalism. These large companies talking about inclusion is just that (talk). Our politicians want to destroy the middle class so they can institute socialist policies and then move us to communism. Not a shot fired. Cruzchev was correct.
@jimclark9826
January 14, 2024 at 10:28 am
I also like his analogy about a bad economy vs. a zombie economy. A bad econ is like a heart attack – worse in the short run but you know how to fix it. A zombie econ is like a body full of diseases which is much harder to understand and cure.
@jimclark9826
January 14, 2024 at 10:28 am
“Moral hazard” is a great concept but a fuzzy phrase. Basically, you win even when you lose. He makes it clear that is a big problem that could destroy everything. Great point.
@robertpoen5383
January 14, 2024 at 10:28 am
7:40 "The market is holding the Fed hostage." I see bubbles.
@jessenoell2154
January 14, 2024 at 10:28 am
I think that as global trade becomes local trade the value of the dollar declines precipitously and the foreign loans that keep our financial system afloat and highly profitable collapse. Soon we won't be able to afford our bloated one world dominating military. That is the perfect storm to end empire.
@geac9100
January 14, 2024 at 10:28 am
The new world order is rolling out the red carpet for the antichrist, satan.
For everyone, if your still in your flesh body the real Jesus Christ
has not returned yet.
At the seventh trump, Christ is returning to earth with a rod of iron
and simultaineously the antichrist is commiting the Abomination
of Desoulation in the Temple of God.
We are all instantaineously returned to our spiritual bodies for Judgment.
Heaven on a rejuvenated earth if your name is in the Book of Life.
It's your soul, repent of your sins and accept Jesus Christ as your Lord and Savior,
if your name is not in the Book of Life, hell for you for eternity.
Do your own research.
@dr.tanveerahmedph.d4176
January 14, 2024 at 10:28 am
Currency Wars: The Making of the Next Global Crises Audible Audiobook – Unabridged
James Rickards (Author), Walter Dixon (Narrator), Gildan Media, LLC (Publisher)
In 1971, President Nixon imposed national price controls and took the United States off the gold standard, an extreme measure intended to end an ongoing currency war that had destroyed faith in the U.S. dollar. Today we are engaged in a new currency war, and this time the consequences will be far worse than those that confronted Nixon. Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries' stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence. Left unchecked, the next currency war could lead to a crisis worse than the panic of 2008.Currency wars have happened before-twice in the last century alone-and they always end badly. Time and again, paper currencies have collapsed, assets have been frozen, gold has been confiscated, and capital controls have been imposed. And the next crash is overdue. Recent headlines about the debasement of the dollar, bailouts in Greece and Ireland, and Chinese currency manipulation are all indicators of the growing @t James Rickards argues in Currency Wars, this is more than just a concern for economists and investors. The United States is facing serious threats to its national security, from clandestine gold purchases by China to the hidden agendas of sovereign wealth funds. Greater than any single threat is the very real danger of the collapse of the dollar itself.Baffling to many observers is the rank failure of economists to foresee or prevent the economic catastrophes of recent years. Not only have their theories failed to prevent calamity, they are making the currency wars worse. The U. S. Federal Reserve has engaged in the greatest gamble in the history of finance, a sustained effort to stimulate the economy by printing money on a trillion-dollar scale. Its solutions present hidden new dangers while resolving none of the current dilemmas. While the outcome of the new currency war is not yet certain, some version of the worst-case scenario is almost inevitable if U.S. and world economic leaders fail to learn from the mistakes of their predecessors.
@MassiveSuccessVids
January 14, 2024 at 10:28 am
Totally opposed to globalization dominated by greedy MF billionaires who whose aim is to control, manipulate our lives keeping us the majority in poverty. F them.
@jackgoldman1
January 14, 2024 at 10:28 am
No price discovery when we use debt as if it is money. Debt is not money. Federal debt notes are not money. US Treasury gold is real money. Stocks are down from 1966 by 50% to 2020 in gold eagles. Stocks down 35% from 2018 in real gold eagles. In fantasy Fed debt notes all is great. In real money, real weights and measures, is all is NOT great. Protect yourself. Get real US Treasury money.
@timstein9779
January 14, 2024 at 10:28 am
Dr. El-Erian is one of the best minds out there. I always watch him on Bloomberg and CNBC.
@catcar9157
January 14, 2024 at 10:28 am
Respectfully, I feel like these questions are a little general and unhelpful in getting good answers from this brilliant mind. Maybe only someone who went thru the last two economic disasters would understand. Some of the questions are almost common sense, and self answerable. He knows so much more…
@michelesimko7541
January 14, 2024 at 10:28 am
Making it difficult for people to borrow. 0% interest loans offers much decreased
@cindyamaral3949
January 14, 2024 at 10:28 am
It's incredibly annoying that investors take on risks but don't want to face the negative consequences of those risks. At some point the feds have to let investors face those consequences. It isn't a law that you have to profit all the time from the markets.
@saeedsalim7962
January 14, 2024 at 10:28 am
هذا
.. مصري .. صاره يقوول من 2015 .. في انهيار في الاقتصاد ..
سهم تسلا اليوم 1500
@iloveamerica4891
January 14, 2024 at 10:28 am
I love America. America did not have to go through Crisis after Crisis. Coward Henry Kissinger did not like democratic Indias Indira Gandhi so playing cold war politics Kissinger orchestrated rise of Communist Mao China directing Richard Nixon to back Communist Mao with US dollars and supply arms US dollars to Pakistan military to counter USSR Russia. Inside US Government elections and laws and democracy are all hostage to money changers #WallStreet. For example, Israel bombed American military intelligence ship USS Liberty 8 June 1967, and President Lyndon B. Johnson went along with Israeli talking points because he wanted to be re-elected. American President pushed the dead American soldiers under the rug. Recently Wall Street created 2008 Global Financial Crisis has changed China's view of following American way of business , hence China 2025, In the US companies incentive is to make stocks go higher hence US companies have been telling US congress to take no action on cyberattacks and on unfair China. #WallStreet always wins.
@hooverelondono9946
January 14, 2024 at 10:28 am
How??????
@ateeqahmad
January 14, 2024 at 10:28 am
I am looking at the books behind him too. A very interesting selection!
@alihashem846
January 14, 2024 at 10:28 am
I listen to Mohamed on the economy in the US before anyone else
@arabyalyemani5855
January 14, 2024 at 10:28 am
Honest and Truthful guy telling us the fact and truth about where we are and what we need to do. Thanks
@logic52
January 14, 2024 at 10:28 am
With their, QE (Quantitive Easing, or much
correct SQE, Scam Quantitive Easing) of printing and selling, "fakely as
money", a countless tons of simply valueless paper (Dolars, Euros, etc.),
the Central Banks are leading the list of the most dangerous delinquents
falsifiers of money ever known in the history. What kind of economies are
those built on legalized false money and legal delinquancy? And how long,
supposedly, could survive such theatrical farce of the Central Banks? Why there are courts for delinquencies? Why people should work, pay or be
taxes, be theatrical budgets especially public, be theatrical dificits, etc.,
etc., etc.? Why in stead, just print those papers and give freely to everybody?
@kenrose9065
January 14, 2024 at 10:28 am
"Get back to normal" makes no sense, because the definition of "normal" got the world into this economic conundrum in the first place.The last thing this world needs is returning to "normal". Is the existing state of a "psychopath" normal? Is the existing state of the world's economy normal? Psychopathic behaviour created the "normal" economy we now live under.
@loaf4008
January 14, 2024 at 10:28 am
bruh his daughter goes to my school lmao
@tieyiklunmliu
January 14, 2024 at 10:28 am
So much blah blah blah.
Just buy gold and silver stocks bros.
Gold for profit. Silver for moonshot.
@ellenrosegaynor8063
January 14, 2024 at 10:28 am
How about our billionaires BUY BONDS in a New Fund available to All our American States, Territories, WA DC… for MAIN STREET People's SUSTAINABLE Re-establishment.
@compresswealthdivideeconom3757
January 14, 2024 at 10:28 am
She should talk with me. This guy will never say how extremely overpriced the markets are. Try 4-10X too high based on historical PE values BEFORE COVID-19 hit us.
@ztan5
January 14, 2024 at 10:28 am
When human kind facing the same enemy and we are instead of united and cooperated but playing blaming games and building up obstacles without fully committed in helping each other, the economy won't get back to normal. De-globalization in such pandemic time is very dangerous. If we cannot see every nation work together to fight this war, then there is no real economic recovery, not even think about it.
@valeryanderson6413
January 14, 2024 at 10:28 am
USA is going to be fine!! We doing great in Phoenix!