What we got today is a clear message the economy is doing well, says Allianz' El-Erian

• Fed's clear message: economy is strong, inflation is the main threat, and interest rates are the primary instrument.
• Market is pricing a September rate hike at almost 60%, which El-Erian suggests is 'getting carried away'.
• While inflation expectations are stable, actual inflation has been above target for 65 consecutive months.
• AI is viewed as a 'potentially a factor of production' that could lead to faster growth without inflation, posing a future debate for the Fed on managing its demand versus supply effects.

Mohamed El-Erian analyzes Fed Chairman Warsh's Jackson Hole speech, noting the Fed's clear message that the economy is doing well and inflation is the primary threat, with interest rates as the main tool. He highlights the market's aggressive pricing of a September rate hike, despite stable inflation expectations, and emphasizes the long-term, potentially transformative, impact of AI as a new factor of production.