Recapping the day's news and newsmakers through the lens of CNBC.
Back Away Slowly: Pimco
Another day, another warning related to the Fed's bond-buying program. This time, Pimco CEO and co-CIO Mohamed El-Erian said economic growth isn't happening fast enough to justify the high asset prices that are a result of the $85 billion-a-month quantitative easing strategy and advises that investors back away slowly.
May saw interest rate, credit, foreign-exchange and volatility risk all come under attack, El-Erian said, adding that there will be some cascading down to equities.
There's a huge disconnect between asset prices and fundamentals, he added, which is OK as long as the fundamentals validate the prices. But if they don't, the Fed is going to have to do even more or prices are going to have to come down.
El-Erian's co-CIO Bill Gross piled on in his monthly letter to investors, saying that Fed Chairman Ben Bernanke and his ultraeasy monetary approach was part of the problem. He believes that the Fed's zero interest rate policy has made life miserable for fixed-income investors and savers, depressing yields and inhibiting businesses from innovating or expanding.
Pimco's double-team wasn't received with enthusiasm by some, but it's clear some are becoming worried that QE is causing risk in the search for yield.