00:00You said this fat is contributing to market volatility. What is it that Chairman Power did on Wednesday that you disagree with? So I said it contributed to undue market volatility is the undue part excessive market volatility? No. I think once again, the Fed did not understand the technicals. Once again, the Fed didn't understand the behavioral aspects of markets. So while Chair Powell went out of his way to be balanced, he did a few things that made the market here just what it wanted to hear. First, confirm that we are downshifting in December. Second, do this. Ahead of the labor report suggesting that maybe he knew something that others did not know. Sir. Talk about risks being now balanced, two sided and bringing his colleagues on the Fed. And then what? He didn't mention, John. He did not push back in any way against what already was a significant rally in markets and a significant loosening of financial conditions. So while he said other things and he was right to say other things, including more NIKKEI warning about inflation staying, warning about our job not being done. He didn't realize where did technicals of this market place were and he didn't realize the behavioral aspect. And that's why you've got this overreaction. And now we're giving some of it back, some of the equity markets basically back to where it was at the end of August when we heard from Chairman Pound at Jackson Hole. You talked about the easing of financial conditions off the back of the speech, the address from Chairman Powell earlier this week. Do you think that means they have to go even further than we expect? And based on where you think the terminal rates are going to be when they deliver projections on December 14th, how much higher ups do you think that DOT in 2023 needs to go? So it's going to be tricky. I'm going to CPI report just just before it's going to be very, very tricky. I suspect that they will guide us to above 5. That's why I think they're going to be going. But this is really tricky. This is a situation where where the Fed has to be zero. Be careful about what it communicates because we don't need undue volatility. And when we come to talk about other segments of the market where there already liquidity strains, we understand why you don't want undue volatility in the marketplace. The June projection for a year in 2023 was 380 September projection for year and 2023 was for six days. When we get the projection, Rick, four year and twenty three in December, is that a five handle? How much how does that need to go in terms of the German rate sensitive terminal? Right. Such as twenty three year end in this on the projections. Listen, I agree with Mohamed Chronicle that I think they've got to get to about 5 ish an independent way. I would come in on one part because our last day last month on the show maybe was a bit animated about this because I think it's right. The chair when he when he said at a press conference of the FOMC meeting where he described this dynamic of we can over tighten and then use our tools to bring it back. And I think I got a little lamb. And I think that's really hard to do unless you're going to be break a lot of structures. It's hard to do that. I thought one of the big changes at the Brookings was when he said actually that we would if we don't want to really do that. That's what some of that volatility was really, because you cut the tail off and that was a really big deal for you that you could go further and bring it back. That was a big deal for four markets. Listen, I think go back to my point. I think they've got to get the funds rate to a level and then let it marinate through the system for a period of time. Put it on hold for a while. It is restrictive where you're going to where you're going to pause it. And in the end, the interest rate tool is one. It was extraordinarily blunt tools today because it gets at some parts of the economy, not others. And you need to see how it's going to it's going to react. But listen, I think the market's got a little overzealous across a series of things, and I still think I got to go to around 5 ish. But again, I don't think they need to go much further than that until you see the data subsequent to it.

No schedule data available.

El-Erian Says Fed Contributing to 'Undue' Market Volatility

Mohamed El-Erian, chief economic adviser at Allianz and Bloomberg Opinion columnist, says markets are giving back an "overreaction" to Federal Reserve Chair Jay Powell's speech on Wednesday after Friday's strong jobs report. "Once again, the Fed didn't understand the behavioral aspects of markets. So while Chair Powell went out of his way to be balanced, he did a few things that made the market hear just what it wanted to hear," El-Erian says. Rick Rieder, global fixed income CIO at BlackRock, also discusses his takeaways from the November US employment report and credit strategy on "Bloomberg The Open." (Source: Bloomberg)