Inflation’s still in the ring
If you were hoping inflation had quietly packed its bags and left the building, Mohamed El-Erian just ruined that fantasy. Speaking on Fox Business's Kudlow, the Allianz chief economic advisor and SMBC chief economist Joe Lavorgna argued that U.S. inflation may head higher under President Donald Trump’s economic backdrop.
That matters because inflation isn't just an economist hobby horse. It shapes what the Fed does next, how fast borrowing costs fall, and whether consumers keep spending like they’re on vacation or start acting like the credit-card bill just arrived.
Why investors should care
Higher inflation is basically the market’s annoying roommate:
- It can keep Treasury yields elevated
- It can delay or reduce the odds of Fed rate cuts
- It can squeeze margins for companies that can’t pass on higher costs
- It can hit rate-sensitive names, from homebuilders to small caps, if the market decides policy stays tighter for longer
The clip doesn’t hand us a neat new data point like CPI, but it does tell you how some big-name economists are framing the policy and market setup. And when inflation talk gets louder, traders usually start recalculating everything from bond duration to consumer demand.
Big picture
This is less about one company and more about the mood music for the whole market. If inflation really does re-accelerate, the “lower rates soon” party gets a lot less fun, and investors may need to brace for a more stubborn Fed.