The January 2016 GSE Report

"The world is on fire" 

"...[T]he Federal Reserve is no longer in control of its own destiny. Ask Fed officials would they have liked to move the Dow by over 300 points after a statement is issued in which they do nohting at all.  The answer is no and yet they did, becuase they are not able to communicate and maintain a clear policy message because they've become hostage to the rest of the world.

It's not thier fault.  They've been pushed into a role that they don't really want.  But think of it htis way - a month earlier, they had told us that they expect four [rate] hikes - now, we get one or two.  A month earlier, they had told us there is a certain balance of risk in the economy.  Now, they're telling us they can't even comment on the balance of risk.  I think the Fed is as confused as anybody else because we're living on the midst of massive changes in liquidity, in volatility, and the gobal economy."

 

Mohammed El-Erian

Allianz Chief Economic Advisor

January 28, 2016