With the Fed buying government debt to keep yields low and growing bank credit at a 10.6% annual rate to do so, he believes that the inflationary outcome seems quite obvious.
Fearing all markets could soon fall, El-Erian injected what he referred to as "Armageddon insurance" into HMC's portfolio for the first time by buying interest rate floors, or a wager that rates would fall, and betting, via credit default swaps, that companies could soon struggle to pay their debts.