More from El-Erian and his analysis of the media's fabricated "sky is falling" inverted yield curve. This time he explains it to the CNBC crew, and they don't argue. They understand it perfectly.
El-Erian states unequivocably that the US consumer can CONTINUE to insulate the US economy from the rest of the world by doing what they've been doing -- buying. El-Erian says that the recession talk is "silly." Watch it.
El-Erian explains why the US markets will be volatile even though the US economy is doing well. He goes into details about which OUTSIDE forces have affected Wall Street (China, Germany, Singapore), but NOT affected Main Street -- and why. This is where he starts talking about "de-globalization." Watch it.
El-Erian was in the process of explaining what he explained to Yahoo! Finance. Fear instilled in consumers by false calls of recession, cause the consumer to stop spending and hurt business -- which starts the snowball effect to a recession that wasn't going to happen."The main risk for the consumer is self-fulfilling expectations. That people read these alarmist headlines about the inversion of the yield curve, that do not take into account big distortions. They get scared. Understandably so. They spend less, and if they spend less, business ... [he was interrupted mid sentence] The corporate sector is more exposed to the rest of the world."
El-Erian draws the contrast between Main Street and Wall Street, but uses the US Economy vs the Corporate Sector to describe the same thing.
El-Erian is waving warning flags over Europe and their ECB policies. Bonds are trading in negative territory over there, and cash is coming to the US in the form of buying dollars and investing in US Treasuries."The bond market is distorted by what is happening outside of the US."
El-Erian lays it out pretty simply and emphatically. He says that the US economy is strong because of being detached from global issues, but the Wall Street globalists are invested overseas and are exposed to the risk of globalism -- which is what is causing the volatility in the stock market. As I have always said, the stock market is NOT a market driver. The stock market reacts to market drivers. This time, those drivers are coming from overseas, not US economic weakness.
The kicker is that the CNBC roundtable understands it and accepts it. Even Gary Cohn the backstabbing globalist sees it.
The more a nation depends on exports (the EU and China), the more exposure they have to de-globalization. It is the reaction by globalists in these other parts of the world -- their world being shaken by supply chain movement -- that is keeping the US markets volatile. But all of that is happening while Main Street -- US consumers -- continues to thrive because they are insulated from it all.
Trump's "America First" efforts are bringing wealth back to the US -- to Main Street -- and of course, Wall Street gets some too; but Wall Street is also having to forego globalist downside risks. Trump is dismantling the post WW2 way of trading globally with one-way tariffs that hurt the US. Trade partners and so-called allies who took advantage of it for decades don't like it. Understandable. They have to pay their own way now, they're not happy, and they're feeling the brunt of tariff balance.
In summary, Main Street (US consumers), which drives the US economy, is NOT hurt by globalism. Wall Street, which is heavily invested in globalism is in flux -- which translates into all of this market volatility that isn't being experienced by Main Street.
This explains why Democrats are so intent upon blocking all of Trump's trade deals that continue to detach Main Street from globalism. Those trade deals (USMCA, China, UK) will insulate Main Street even MORE and allow Main Street to continue to flourish. Democrats can't afford for that to happen. Main Street equals VOTES. If Democrats help Main Street, Democrats will also be helping Trump get re-elected in 2020.
NOTE: Dont' forget. Pelosi took a junket into Central America to try to influence an election to hurt Trump's immigration efforts with Guatemala. Desperate people do desperate things.
Details on Democrat efforts to stall/stop Trump's trade deals to follow.