Major price realignments in crude oil and currencies threaten the market's days of low volatility, Mohamed El-Erian says.» Read More
The weak jobs report underscored America's economic crisis but also a bigger risk for the market: a synchronized global slowdown. El-Erian weighs in on what it means for investors.
Recent volatility serves as yet another reminder that markets cannot be divorced from developments in the global economy — and especially at a time when the 17-member construct of the European monetary union is being increasingly questioned on account of what is happening in Greece.
Sunday’s elections in Europe occurred in three countries with diverse economic circumstances, and they were for different parts of government (presidential, regional, and parliamentary respectively). Yet the common message from the electorate is undeniable, reminiscent of a famous line in the 1976 movie Network: “I'm as mad as hell, and I'm not going to take this anymore!”
"Our strategy is based on a lackluster recovery. So we are assuming it will be a lackluster economy, Pimco CEO Mohamed El-Erian tells CNBC's Closing Bell.
A diverse set of circumstances and potential economic outcomes around the globe are forcing investors to take an equally diverse approach to investing, Pimco's Mohamed El-Erian said.
This week's market action serves as a vivid reminder of how dependent valuations are on central bank policies, and especially the aggressive provision of liquidity by the Federal Reserve and the European Central Bank.
An extended period of "financial repression"—brought on by low interest rates—means investors will have to do what they can to get income while keeping up a strong defense against global slowness, Pimco's Mohamed El-Erian told CNBC Monday.
"We are living in a financial repression right now," says Mohamed El-Erian, PIMCO CEO & co-CIO, sharing insight on the Greek default, the euro zone crisis, and the outlook for the markets and economy.
One of the challenges investors face today is how to reconcile seemingly conflicting messages coming from different markets. Is Dow 13,000 consistent with a 10 year U.S. Treasury at 2% and gold at almost $1,800? Is $125 Brent oil consistent with cyclically low implied volatility in many market segments, as well as widening CDS spreads for Middle Eastern oil producers?
This year's market gains will need more than an improving economic picture and investor willingness to shrug off Europe's debt crisis, Pimco's Mohamed El-Erian told CNBC.
The health of the global economy, and that of markets, depends on the success of a series of medium-term handoffs between the public and private sectors – in growth, balance sheets and credit flows.
It is unclear the extent to which the downgrades will alter the function of the international monetary system over time. It is also unclear how material the incremental headwinds blowing out of Europe will be for countries already facing internal fragilities.
Despite a steady flow of positive economic news, fears over European debt contagion have prevented investors from believing that a recovery has taken hold, Pimco's Mohamed El-Erian told CNBC.
The International Monetary Fund (IMF) should resist pressure from European Union leaders to take part in inadequate bailout programs for European countries, Mohamed El-Erian wrote in the Financial Times.
As a New York Jets fan, I despair of all the talk about the New England Patriots. I desperately want to wish the Patriots away, but I cannot. They matter. When it comes to Europe, investors around the world also face this exasperating combination of having, but not wishing to pay close attention.
Jim Cramer has brilliantly posed the most important question facing the markets today when thinking about the impact of Europe: "Is there too much hope here?"
The stories that may well materialize in the next few weeks will be more heavily influenced by what happens this week to Europe's latest yield curve inversion, core bond rates, and policy announcements.
Signals of market stress are increasing, with a growing number of measures now flashing yellow and some on the verge of flashing red. The longer this persists, the greater the risk of very large market moves - in either direction, depending on the economic and financial catalysts.
Policymakers have taken the wrong approach in dealing with the global economy's numerous problems, shuffling debt around while avoiding making difficult decisions, Pimco's Mohamed El-Erian said.
The market and global economy have lost their anchors, including the US losing its credit rating, Switzerland losing is "safe-haven" status, and the European banks in crisis, says Mohamed El-Erian, PIMCO CEO & co-CIO. "The reality is the dog is Europe," he adds.