US equities closed lower last Friday as investors shrugged off the morning’s optimism on reports that Spain may finally request for financial aid. The S&P500 slid 0.01% to close at 1,460.15, while the Dow Jones Industrial Average index let go of 13.90 points, or -0.13%, to close at 13,579.47.
In an interview with CNBC, Pimco’s CEO Mohamed El-Erian stated that not only are the US Federal Reserve and Chairman Ben Bernanke willing to tolerate inflation, they are actually trying to create it, leaving a “mess” behind for their successors to clean up.
El-Erain criticized the Fed’s QE3 move, reasoning that the risks outweighed the rewards, as the economy was still sinking three years after the financial crisis recession supposedly ended. He added that the policy was a “reverse Volcker moment”, referencing former Fed Chairman Paul Volcker, who increased rates and purposely put the nation into recession in the early 1980s to control inflation.
The EU’s leaders are currently struggling to solve a crisis-fighting stalemate as they deal with conflict over a banking union, Greece’s continuing debate on how to meet bailout requirements as well as Spain and Italy’s delay on requesting for financial aid.
German chancellor Angela Merkel and French President Francois Hollande stressed French-German discord over the weekend as they argued on the timetable to introduce joint oversight of the region’s banking sector, with Merkel dismissing Hollande’s proposition to activate it as soon as possible. Merkel argued that though markets watching Europe wanted to see results already, the process still had to be thorough, the quality had to be good, and then they would see how long it took.