Call Me Back - with Dan Senor - Nine Point One - with Mohamed El-Erian

Episode Date: July 14, 2022

Inflation hit a staggering 9.1% over the last 12 months, rising 1.3% for the month of June. The increases were “broad-based,” as the Bureau of Labor Statistics (BLS) put it, touching just about every aspect of our lives…especially food prices and energy prices. In anticipation of these new numbers, we invited Dr Mohamed El-Erian back to the podcast. He is President of Queens' College at Cambridge University. Mohamed serves as part-time Chief Economic Advisor at Allianz and Chair of Gramercy Fund Management. He’s a Professor at The Wharton School, he is a Financial Times contributing editor, Bloomberg Opinion columnist, and the author of two New York Times best sellers. He serves on several non-profit boards, including the NBER, and those of Barclays and Under Armour. From 2007-2014, Mohammed served as CEO/co-CIO of PIMCO, which has over two trillion under management. He worked at PIMCO for a total of fourteen years, and was chair of President Obama's Global Development Council. He also served two years as president and CEO of Harvard Management Company, the entity that manages Harvard’s endowment. He has been chair of the Microsoft Investment Advisory Board since 2007 Mohammed is expert in many domains when it comes to the financial markets and the macro economy, but especially - inflation.

About a year ago, it became clear to some of us that it was foolish of the Federal Reserve to dismiss inflation as transitory, that there was too much evidence coming, particularly from companies, that this inflationary process was starting to get entrenched. Had the Fed at that point kept an open mind rather than repeat over and over the mantra that inflation was transitory, something that it maintained all the way till the last day of November, it could have started to softland the economy. And by softland, economist means that you don't sacrifice much growth, but you're able to contain inflation. It didn't. Inflation has hit a staggering 9.1% over the last 12 months, rising 1.3% for the month of June. The increases were, quote, broad-based, as the Bureau of Labor Statistics put it,

touching just about every aspect of our lives, especially food prices and energy prices. In anticipation of these numbers, we invited Dr. Mohamed El-Aryan back to the podcast. Mohamed was on a few months ago to talk then about what we called the new inflation. That conversation was a big hit, so we were looking forward to getting him back. He's president of Queens College at Cambridge University. He serves as part-time chief economic advisor at Allianz and chair of Grand Mercy Fund Management. Mohamed's also a professor at the Wharton School. He's a Financial Times contributing editor, a Bloomberg Opinion columnist, and the author of

two New York Times bestsellers. He also serves on non-profit boards, including the National Bureau of Economic Research and also the boards of Barclays and Under Armour. But from 2007 to 2014, Muhammad served as CEO and co-CIO of PIMCO, which has over $2 trillion under management. He worked at PIMCO for a total of 14 years, and he was also chairman of President Obama's Global Development Council. He previously served two years as president and CEO of Harvard Management Company, the entity that manages Harvard's endowment, and he has been chair of the Microsoft Investment Advisory Board since 2007. Mohamed is expert in many domains when it comes to the financial markets and the macro economy, but especially inflation. This is Call Me Back.

And I'm pleased to welcome back to the conversation my longtime friend, Mohamed El-Erian. Mohamed, thanks for joining us. Thank you. It's a pleasure to be with you. I know I'm seeing you in about a week in person, but I didn't want to wait till then to have this conversation. So I figured we could have a second conversation when I see you in real time live or in person. But there's just so much happening right now. Jobs report out. Obviously, everyone looking to the next Fed meeting. I want to get a snapshot from you on where things are with the economy.

And then I want to get into the drivers. But you're a fan of distributions. You talk a lot about your baseline, your left tail and the right tail in terms of how you see where we are in the macro economy. So can you walk us through where you currently see the distributions? So the baseline, the most probable outcome is stagflation. Growth starts coming down and inflation remains uncomfortably high. The right tail, the best outcome is that we return to high growth and low inflation. That tail has become very thin, means not very probable. The left tail is a recession, and that tail has got a lot fatter, much higher probability. So if you look at the distribution, it's a very

uncomfortable one, because it means that the average American is now seeing their purchasing power erode at the rate of 8% to 9%. And there is a possibility that they will also start seeing their income be less buoyant. So they get hit both on the price side and on the income side. So in terms of losing the high growth, low inflation scenario, your right tail, how did we lose that option? Or you say it's thin, so let's say it's not totally lost, but let's say it's extremely thin. So how did we fail to grip that? We failed in two ways, one that we controlled and one that we did not control. About a year ago, it became clear to some of us that it was foolish of the Federal Reserve

to dismiss inflation as transitory, that there was too much evidence coming, particularly from companies, that this inflationary process was starting to get entrenched. Had the Fed at that point kept an open mind rather than repeat over and over the mantra that inflation was transitory, something that it maintained all the way till the last day of November, it could have started to softland the economy. And by softland the economy. And by softland, economist means that you don't sacrifice much growth, but you're able to contain inflation. It didn't.

And even when it acknowledged that it had got its inflation call horribly wrong for a long time, it did not act. We had this absurd situation that in March of this year, when we printed a 7% inflation number, the Fed was still injecting liquidity into the economy. That was our fault. That will go down in history as one of the biggest Fed policy mistakes. It's been made worse by Russia's invasion of Ukraine. What Russia's invasion of Ukraine did is aggravate what was already in play. It did so first by putting pressure on commodity prices, particularly foodstuff and oil, making inflation worse. And second, by disrupting once again supply chains. So we've ended up having now to deal with the Fed's own mistake and then a significant amplifier in what happened in Ukraine.

So when inflation was at 7%, what was that point you're saying, in March? That was in March, but it was on its way up well before then, clearly on its way up. So the inflation is hitting 7%, it's March. Had Russia invaded Ukraine at that point? It had. They invaded on February 24th. Right, right. So Russia, okay.

So inflation is at 7% in March. Russia had already invaded Ukraine. So the economic pressure being aggravated by the geopolitical pressure was already obvious. What was the Fed's explanation at that point? So first, that inflation print captured inflation as of mid-February. So it was independent of the Ukraine invasion. The Ukraine invasion has taken us almost to 9%. So the Fed was trying to get out of a hole that it had dug for itself, but inadvertently was digging it deeper. When you lose control of a narrative, you've got to do three things quickly. The first is explain why it is you got it so wrong.

Now, the European Central Bank has done that, but the Fed has not. Second, you need to convince the world that you have modified your forecasting tools so you don't make the same mistakes over and over again. Again, the European Central Bank has told us what it has done, the Fed has not. And then third, if you're a central bank and you are politically independent, you need to come across as a technocrat, as telling it as it is, rather than trying to sugarcoat what you're saying. Unfortunately... the Fed hasn't done that third one either. So you have a situation when they came out with their last projections, and now we're

talking about June. They were dismissed by not just economists, but also by former Fed official as fanciful, dreamy, unrealistic. So the problem is that the Fed hasn't done the basic things that allow it to regain its credibility. And until it does that, the policy challenge is going to be acute. Okay. So I want to follow up on two points you made. One, you've made this point quite a bit that the ECB, the European Central Bank, has actually explained what it got wrong, and that's a clear contrast to our Federal Reserve. So you've been in the central banking world. What motivated the European Central Bank to explain that it got it wrong? And what did it describe as getting wrong? Like, what did it say? Like, we got this wrong, and this is what we got wrong.

What's the this? I think what motivated it is good central banking policy. Central banks operate through what's called forward policy guidance. They guide you to the outcomes that they want. And you can't guide people unless you're credible. So the ECB simply did what's in the game plan for good central banking. And there's a lot of debate going on as why hasn't the Fed done that yet? As to what they've acknowledged, they acknowledged that they underestimated the initial price shock. They acknowledged that they underestimated that the supply shock. They acknowledged that they underestimated that the supply chains wouldn't fix themselves quickly. They've also acknowledged that they underestimated that companies themselves would seek to build up more resilience, which means that they would

disrupt their own supply chains as they try to rewire them from the just-in-time paradigm to the just-in-case paradigm. So now you're saying that the Fed here, because it has not acknowledged mistakes when it issues its forward policy guidance, it's not treated with a high degree of credibility. So what are the implications of that? I mean, the markets just kind of roll their eyes when the Fed issues its forward policy guidance? That seems pretty unsustainable. Yes, and I think it's a concern to lots of people. The implications is rather than lead markets, the Fed is pulled along by the markets. And that means that the Fed could overreact. And in fact,

the main concern today is that a Fed overreaction will push us into recession. So how does that work? The Fed is supposed to lead markets because markets have a few tendencies. They overshoot. So you don't want to be having it be in a situation where markets simply overshoot day in and day out because that causes damage in itself. Second, you want to guide the markets to the sorts of outcomes that are most likely. Markets don't get to these outcomes in a linear fashion. So you want to minimize the disruptive path. If, however, you are not leading the markets, but you're lagging the markets, the markets will tend to pull you in a place that you really shouldn't be going. And that is what has happened this year. First, the markets were really worried about inflation.

So they forced the Fed to project a very aggressive hiking rate. We heard, for example, that the commitment to inflation today is now unconditional. However, when the economy slows down and you have an unconditional commitment to inflation, you could end up tipping it into recession and then end up by creating another policy mistake, which has significant damage. And the people getting hurt right here are the people that can least afford to get hurt by what's going on. So can you just spend a minute on that? When you were on a few months ago, you explained it, but I just think it's worth um i think we can never say this enough that that inflation when it really kicks into high gear is ultimately a huge tax on the on the poor on the people on fixed

income uh on people who are unemployed uh can you can you explain that yes and remember inflation hits everybody right it's not like unemployment that can hit some people. I don't want to in any way understate how much damage unemployment can make. But when you hear 3.6% unemployment is 3.6% of the population, inflation hits everybody. Our initial conditions are very different. Our ability to absorb price shocks are very different. If inflation comes mainly from foodstuff and from gas, those two elements take a massive bite out of people's budgets if you are lower down in the income ladder,

which means that you start to have to make really difficult decisions. Often you can't just give up on driving because you're driving to work. Food is very difficult to give up on. So you start cutting expenditures elsewhere. At some point, when inflation continues at 8% to 9%, that is not enough. And then you're left with terrible choices. There's a reason why today the lines outside food banks are growing again. So this has massive social implications. It also has economic implications because you start to destroy demand, which means that once again, you have a bigger slowdown than you would otherwise. And of course, it has massive political implication because people get angry.

And people don't quite understand how the Federal Reserve works. So it is the administration that gets blamed for inflation. We are constantly told by officials in government, by different voices in the media, that really the inflation bomb was created by the actual bombs that were dropping in Ukraine from the war in Russia. And you've made the point here and elsewhere that the Russian invasion of Ukraine was a, but not the driver of our current situation. And if anything, the Russia war amplified already a bad situation. So can you just, I know you touched on that before, but you just spent a moment on that, that the dynamics were in place well before the invasion, the Russia's invasion of Ukraine.

Yeah, and the numbers are very clear. As I said, we had gotten to 7% inflation before the invasion happened because that captured the situation on the 15th of February and the invasion started on the 24th of February. Look, there's no doubt that the first shock to the inflation was exogenous. So even before the Ukraine war, I'll take you back to spring of last year, there were supply-side disruptions. There were labor shortages. Companies couldn't secure their inputs. They were having to pay more for labor. So you had an initial shock that was what's called exogenous. It came from outside. But if you've lived through inflation episodes, and very

few people have because the last bad inflation episodes was the 70s and early 80s, you realize very quickly that it's not the first round effects that get you, but it's the second 80s, in the 70s and early 80s, you realize very quickly that it's not the first round effects that get you, but it's the second, third, and fourth round effects that get you. So the role of a central bank is not to compensate for supply chains. It's not to compensate for wage issues. It is to stop this being entrenched in the system. Let me give you a very simple example. If I believe that inflation is gonna go away, I will not go ask for higher compensation.

If I have, however, I am continuously surprised on the negative side by inflation, I will not only come and see you and say, I need to be compensated because my standard of living has come down at a rate of almost 9% in a year, but I don't trust what's ahead. So I need to be compensated for future inflation as well as past inflation. Once that happens, it hasn't yet, but if we're not careful, it will. Once that happens, inflation becomes endemic. You get what's called a cost-price spiral. Higher costs lead to higher prices,

higher prices lead to higher costs. And then you've got to really do a Volcker and take this economy into a deep recession to get the inflation disease out. Do you think we're heading towards that, where we need a Volcker, where you can no longer just tap on the brakes, but you have to slam on the brakes? I think the Fed is already going to slam on the brakes because they're worried now about their credibility and their political standing. My concern is we slam on the brakes, and then we take our foot off the brakes, and then slam on the brakes, then take our foot. It's called stop-go. It's a trap, a policy trap that developing countries fall into, and that quite a few advanced countries fell into in the 70s and the 80s, where you don't have the conviction of your policies, and therefore, you get whipsawed. I think that's the biggest risk right now. And that would be tragic,

because if that were to happen, then in a year's time, we will still be dealing with inflation, and we would have damaged growth quite a bit. You've got to get inflation out of the system at this point. You mentioned that most people who are players in this modern economy have not lived through an inflation spiral like we're experiencing right now. There was a recent piece I read in The Economist, which we can post in the show notes, that actually looks at the CEOs of some of the largest companies in the US.S. and Europe. And it's pretty interesting. I mean, it shows that even the people running some of these large companies fit into that category that you just fit that characterization you just described,

haven't really lived through inflation. I mean, they may understand it at a purely academic level, but they don't know what it means to operate a company in a high inflationary environment. How acute do you think that problem is? I think it's a serious problem. I mean, you have two things. You have people who haven't lived through it, and you have operating models that are not built for inflation. So you get the double whammy, if you like. Look, let's be clear. Inflation at some point is going to come down. The question is how much damage is created and how much of that damage was avoidable.

I go back to the person who is struggling right now to make ends meet because of inflation. And what happens if we go into a recession? They risk their job at that point. So the question is not just, will the system adapt to inflation? It will. It's at what cost? And I am worried in a serious manner

that we may end up with paying a much higher cost than we would otherwise. And that's true for companies. That's true for households. And that would have implication also for the next few years in terms of our ability to grow again in an inclusive manner. When you look at the Fed's options now, and recognizing your point that the Fed is likely to get aggressive,

what does aggressive, by the way, look like in the next, like what could we see coming out of the next Fed meeting? So you would see 75 basis points again, which would be very, very unusual to have two 75 basis points hikes at the same time. But would you still consider that aggressive? Another two back-to-back 75 basis points is aggressive, okay? And then it would be followed-back 75 basis points aggressive okay and then it will be followed by a 50 basis points hike um and there will be a lot of questions as to the amount of

damage you you do to the marketplace as well um and you know we normally shouldn't care about valuations but you care about market functioning so that's the other concern, that if you go too fast, there's still highly levered positions in the marketplace that then you force a disorderly deleveraging. That's why central banks do not like doing 75 basis points, let alone have to do 275 basis points followed by 50 basis points. If you go back, I mean, I think about the tools available to the Fed. So if you go back to the post-global, you know, the global

financial crisis and the amount of monetary stimulus that followed that crisis and it, you know, it felt that the, it seemed like the Fed had never really let up. They just created this highly stimulative environment and they never reduced the stimulus even when the economy was booming

and markets were thriving. And there was that period in 2018 where the Fed made modest steps to shrink its balance sheet by allowing, I think, to mature a few of the QE bonds it had purchased, as well as raising interest rates to a very modest level at the time of 2.5%. And that caused something like a 20% stock market decline, if you look at global markets. And then the Fed got panicked and immediately changed course. It sort of like, it experimented with a little more

of a sober approach and the markets said, whoa, and then the Fed reversed course. So how much over the last decade, how much of a problem do you think it is that over the last decade, the Fed did not ease the, or not reduce the stimulative environment it could have created. So now any action it takes seems, to use your word, pretty aggressive. Necessary, but aggressive. And it's sort of, it's reduced its options. So it's the only option it has. And it's not only a dynamic of the last couple years, it's a dynamic of like the last, over the last decade, where it's not only a dynamic of the last couple years it's a dynamic of like the last over the last decade where it's created the situation where it has few options

so first of all i there's two element two elements to your question first of all today the fed has no choice but to be aggressive it is so late that the alternative of not being aggressive is even more problematic. Because it is so late, there is no first policy option, that whatever it does has collateral damage and unintended consequences. And just listen to how Fed Chair Jerome Powell has evolved in his communication. He used to talk about a soft landing, then became a softish landing, and now he acknowledges that it's going to be very tough. And that just tells you that because they've waited for so long and they misread the situation, that they no longer have this first best option. There's also the element that you rightly suggested,

is that for the last 14 years, the Fed has played a massive role in the economy. I wrote a book in 2016 worried about that called The Only Game in Town, and it looked out five years and asked the question, what happens if we continue like this and how do we get out of it? Factoid. Before the Fed got really aggressive and started injecting tremendous liquidity, putting cash into the system, its balance sheet amounted to $2 trillion.

Today, it amounts to $9 trillion. That's an enormous amount of money that has gone in. The Fed has basically injected liquidity on a regular basis. Now, markets are um smart if they realize that the fed is committed to this policy of massive and predictable liquidity they will front run the fed and you start concepts coming in like formal the fear of missing out because the fed is going to put in more money. Buy the dip, because if there's any market instability, the Fed will come in. The notion of a BFF, the Fed is our best friend forever. Comes 2018, as you rightly say, Jerome Powell is new to the job.

He realizes that there's this very unhealthy codependency between the Fed and the markets. And he tries to slowly bring the Fed out of this equation and the markets have a fit. And then he decides to go back in. That absolutely confirmed to the market that they held the Fed hostage. And then we have another $4 trillion of liquidity put in, including, to be fair, in the midst of COVID. So you do have a situation now that you're not just dealing with the economy when you start tightening monetary policy, as you have no choice but to do so because inflation is

so high. But you've got to somehow avoid unsettling market volatility. Because ultimately, what you don't want is the tail to wag the body. You don't want financial markets to undermine economic activity. And that's going to be a really tricky situation to handle. The last jobs report had a gain of 372,000 jobs in the U.S. labor market. There's still something like twice as many job openings currently as there is a number of unemployed. What is your sense of where we are with regards to the labor market and where do you see things going? So with the exception of one metric, the labor market is strong.

Like you say, we have 11.3 million vacancies. That's 1.9 the amount of people that are unemployed. Wage growth is at 5.1%, the unemployment rate is at 3.6%, we're still creating over 300,000 jobs. There's very little to complain about the labor market. It's labor force participation that's a problem. Labor force participation is to the labor market what productivity is to the economy. It allows you to be a lot better. If we had more people entering the labor market, that would help in terms of labor shortages. It would put a lid on wage increases. It would be a good thing. It would help the supply side, what we desperately need to do right now. We don't have

a problem of demand, we have a problem of supply. So the labor market is fine with that qualifier, which is an important one. And that's good. Have you noticed I did not say recession is my base case? Some people have already gone there. I think we have a possibility to avoid a recession because the labor market is so strong. The only way we end up in a recession is if the Fed ends up making another policy mistake. But because of a strong labor market, we need not end up in a recession. So anyone experiencing travel this summer is experiencing in real time everything you've described, right, today. Fuel prices high, driving the price of commercial air travel, you know, through the roof and other inputs. Labor shortages at airports and at airlines because of low labor force participation.

A lot of job openings and and so like every time i mean i've experienced this every time i speak to someone who's traveled they're like they're ready to pull their hair out uh about how horrendous the experience has been how how much of it is it is it is it like a living breathing example of of what you're describing and how does it subside so it's the extreme of what I'm describing because I've experienced this as well. You know, long lines of security, planes getting canceled because they can't find enough people.

I was at Heathrow last week, 10 days ago, and I was there mid-afternoon and they already told me in Terminal 2, I was flying from London to the U.S., that 30 flights had been canceled that day, already, that morning. And the security line was outside of Terminal 2. They had to move the security line outside the building because there was no space inside the building for everyone to queue up

because there were too few lines, because the security staff were not showing up. You're making me very nervous. I'm going to Terminal 2 in two days' time. I'm sorry. It was bad. I got to tell you, it was bad. It was like a mutiny there in Terminal 2.

Okay. So why is that the extreme? Because even if an airline or the TSA decides to hire somebody, they got to get security clearance. So the system is even more cumbersome in terms of returning. So you need to find the people which are doing a better job, but you also need to be able to clear them.

So that is the extreme. In the meantime, what's happening? Well, British Airways, you talked about Heathrow. British Airways announced a couple of days ago they've canceled 10,000 flights this summer. So if you're traveling, you have fewer choices and higher prices. Inflation is still in the system, is what I'm trying to say. That's the extreme of it, but restaurants are having the same issues.

So we haven't yet solved it. And it speaks to something really important, which is we need to have a coherent supply side policy and we need to coordinate it around the world. A lot of these issues are collective action problems. Supply chains are a collective action problem. So as much as I'm focusing on the Fed, there's another element that's really important, is that we need to take seriously our supply side. And we need to do a lot better in terms of improving our supply side. And if we do, not only will we improve our growth, but we will improve our productivity. Okay, I've got two more questions, and then we'll let you go. One is

substantive, one is not. On the substantive front, the one word we have not mentioned this entire conversation is COVID, which is interesting. And yet so many of the dynamics we're dealing with are legacies, are the legacy of COVID, the six plus trillion dollars pumped into the u.s economy not to mention what the global markets global economies um are we past i mean are we dealing with the legacy of of covid and covid policies but covid is no longer a real economic risk like how do you think about where covid fits into all this have we just just moved on? So it depends who we is. So if we are the US, we have mostly moved on, not completely. We have some of the legacy, certainly labor force participation, certain supply side issues that we talked about, our legacy. And also some people are testing negative and testing positive and not turning

up to work. And that happens and put the new variant of Omicron in there. And we still have a possibility. But is it the major driver of our economy? No. If however you in China, it's a completely different story. Because China is trying to run a zero COVID policy with Omicron. That does not work. At some point, the Chinese are going to have to swallow their pride and use Western vaccines in order to overcome the trade-off between lives and livelihoods. Vaccines allow you to reconcile lives and livelihoods. So if you're in China, COVID is very much alive,

and it is disrupting you because you get shut down every once in a while last question um this is totally of the non-substantive uh nature the uh a famous italian footballer who's now a manager at real real madrid famously said that sports are the most important, least important thing. So I want to end with the most important, least important thing. I learned recently, and I'm shocked that I did not know this, that you're a New York Jets fan. I am. And a New York Mets fan. You should feel sorry for me. No, I, I, so I've, I've, this is, I, people threaten to, to turn me into social services

here in New York because I've turned my kids into Jets fans. Thank you. Thank you. And we don't miss a home game, and we even sometimes travel to away games. So I know you're not terribly optimistic about the Fed and the Fed's future, but where are you on the Jets' upcoming season?

I think there's a world in which they break the double digits in terms of wins. I'm looking at their schedule and seeing a possible 10 or 11 wins. Look, I hope you're right, but you're obviously much younger than me because you're falling into the typical Jets trap, which is at the beginning of the season we are optimistic, and it takes us about five or six weeks to realize that it was just going to be a repeat of everything we've seen since Joe Namath. And that, you know, that's our reality.

Look, I'm going to be perfectly honest. I'm going to be cheering for the Jets, but also cheering for the Bills. Because if I can't see the Jets get to the playoffs, I don't want the Patriots to get to the playoffs. So here's my rationale on that, is that I'm in a similar situation. So obviously, I feel the same way about the Patriots that you do. I also was born in Utica, New York.

And I lived in Toronto for years, which is a couple hours drive from Buffalo. So the Bills were the closest thing we had to a local team. And they are such a winning team that always gets the short end of the stick right all those Jim Kelly seasons and they couldn't win the Super Bowl and so they're like a hardscrabble team that I've always an underdog that I've always and they've always gotten so close and I've always kind of quietly rooted to them rooted for them so actually the two teams I care about if the Jets can't make it are the Bills, and for other reasons, I'll walk you through another time, are the Cleveland Browns. But I'm

confident this year that the Jets are not a team for which we need to have backup teams, because I think they won the draft season. I think their draft picks this past spring were terrific, and we'll wax poetic about it when I see you in person in a week. But I'm excited that you're part of Jets Nation. And I'm also excited that I'm also appreciative of your insights. But the Jet today on the economy, but the Jets part of your bio has added a whole new perspective for me. How about the Mets?

How about the Mets? I like the Mets, but my kids are Mets fans. I'm a little more agnostic, but I'm for the Mets? I like the Mets, but my kids are Mets fans. I'm a little more agnostic, but I'm for the Mets. I root for the Mets. They're definitely my local team, but I'm not a religious zealot about it the way I am about the Jets. Well, you should know I turned up on TV wearing a Jets jersey. Really?

Yes. When? Big mistake. Big mistake. Big mistake. It was when we beat the Patriots in the playoffs. Oh, I remember that. That was an amazing, yeah, yeah, yeah. Anyways, we'll have to get you to a game

with Campbell and my crew because we're nuts. And it's good to find someone else who's equally as nuts. Mohamed, thank you, as always, for taking the time to be with us. And I'll see you soon and hope to have you back on the podcast again, as I'm sure the matters about which you discuss and analyze are not going to get any less grim for the foreseeable future.

So on that upbeat note, thanks again. Thank you. It's my great pleasure. That's our show for today. If you want to keep up with Mohamed El-Erian, you can track him down on Twitter. He's at El-Erian M. So his last name and his first initial, E-L-E-R-I-A-N,

and then M as in Mohammed. And you can also find his published work at the Financial Times and Bloomberg. Call Me Back is produced by Ilan Benatar. Until next time, I'm your host, Dan Senor.