Asks whether recent data wave can provide definitive Fed policy direction
Sarah
Mohamed El-Erian
No definitive data due to deep Fed divisions from three good reasons and one awful reason
Mohamed El-Erian
Market narrative shifted from 'cuts despite solid economy' to 'no cuts despite weakening labor market'
Asks about wealth effect impact on high-end spending potentially influencing Fed doves
Sarah
Mohamed El-Erian
Wealth effect less powerful than believed, more concerned about technicals and risk mitigation properties
Asks what El-Erian would advocate if on the Fed
Sarah
Mohamed El-Erian
Would cut rates, believes on cusp of major productivity boom allowing looser monetary policy
Presents counter-argument that economy doing well so Fed should stand pat
Sarah
Mohamed El-Erian
Argues for more recoverable mistake on growth side versus inflation side