Patiently waiting to act in knee jerk reaction with the rest of lemmings in 15 minutes...
One of the more astute minds in the economic / financial community is PIMCO's Mohamed El-Erian. With deflation all the rage the past 4-6 weeks, along with fears that we're heading to our Japan-like zen (please note you can read the phrase We are Japan on this blog well over 2 years ago) we'll just add this to the pile. It seems the bond market is sending similar signals... if not deflation, at least disinflation.
- The U.S. faces a 25 percent chance of deflation and a double-dip recession, according to Mohamed A. El-Erian, chief executive officer at Pacific Investment Management Co., which runs the world’s biggest bond fund. <
- “I do not think the deflation and double-dip is the baseline scenario, but I think it’s the risk scenario,” said El-Erian, 51. U.S. unemployment will probably stay unusually high, he told reporters today in Tokyo.
- Companies are accumulating cash and individuals are saving, making it tougher to counter deflation, El-Erian said. That reduction in private-sector spending makes government policies to stimulate the economy less effective, he said
- A mix of the lowest U.S. inflation rate in four decades and concern that the global recovery will falter is boosting Treasuries, sending two-year yields to a record low this week.