"We are living in this wonderful world of liquidity," the Allianz chief economic advisor said on CNBC's "." "But be careful. There is an end at some stage. It's just very difficult to say when."
The first, he said, is "reconciling short-term favorable momentum with mounting medium term uncertainties." The second is investors adjusting their portfolios to include some risk mitigation that is still valued attractively. The liquidity in the stock market can be traced to consistently low bond yields and a Federal Reserve that's been keeping policy interest rates at historic lows since the 2008 financial crisis.on Friday for the first time since October. The 30-year bond yield was around 2.16%.was up about 3% year-to-date, following a 2019 that saw the index post an almost 29% advance for its best annual performance since 2013.
For 12 years it has worked and the only thing that would possibly thwart it is a Global Thermal Nuclear War. Want to play a game?
They don't have to add liquidity forever, they just need to crush yields and obliterate the $VIX, stocks will go higher all on their own.
What’s crazy is that there is a band of idiots out there like AOC that are pushing “Modern Monetary Theory” that think it can last forever. Then Trump wants negative rates. We live in crazyland and are surrounded by fools on all sides. Political extremism is destroying us.
Liquidity for companies turning profits or even breaking even with an eye to a more positive future is important for the social safety net. Best regards.
Finally El-Erian takes his head out his butt. The bond market is an enormous bubble, and low rates are driving asset prices crazy. Rates are going to rise, and this is going to end badly.