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.
The underlying forces speak to the disruptive combination of too much debt and too little growth; and the recurrent bouts of instability also reflect the inability of policymakers and politicians to catch up with realities on the ground, let alone get ahead of them.
Last week, PIMCO professionals gathered for 3 days in in Newport Beach California to discuss how this, and other major medium-term themes for the U.S. and emerging economies, would play out over the next 3-5 years.
During this annual "Secular Forum," we focused on the how policy confusions and lagging responses imply a series of market inflection points, some probable and others possible. And we derived the investment implications of our medium-term baseline, along with the main two-sided risk scenarios.
For more information, including the analysis and findings, please go to http://media.pimco.com/Documents/Secular%20Outlook%202012_Global%20Final.pdf
Dr. Mohamed El-Erian is CEO and Co-CIO of PIMCO, the global investment manager.