El-Erian On Stocks: "Prices Are Artificially High - It’s Time to Take Profits"

Tyler Durden's picture




 

"It’s not going away, it’s going to get worse," is how PIMCO's Mohamed El-Erian warns Yahoo's Lauren Lyster about central bank policy and the currency wars that are so much in discussion currently. Central banks have been compelled to undertake unconventional measures, things they haven’t done before, because other policymakers are not stepping up to take responsibility on the fiscal side. These implicit devaluations and beggar-thy-neighbor policies force a lot of liquidity into the system and by pushing up asset prices, central banks believe, create a 'weath effect'. It can also trigger “animal spirits” – we get all excited and invest more.

The hitch, El-Erian says, is that in the process, central banks may “break” something. A currency war would fall into this camp. So it’s “high-risk, high-reward and no one can tell for sure which way it’s going to tip,” he says.

In terms of equity markets, El-Erian says investors are split into two camps.

  1. One camp believes that everything will go higher and central banks will succeed in their efforts.
  2. The other camp believes asset prices are going to come down to meet the fundamentals.

El-Erian puts himself in the second camp.

We think that prices are artificially high, that maintaining them here is going to be hard as central banks become less effective, and that it’s time to book some profits and to wait for some better entry points,” he explains.

He clarifies that this is not a “Lehman moment." But “prices that have gotten way ahead of what policy can deliver,"

 

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Fri, 02/15/2013 - 18:50 | 3248030 Mr Lennon Hendrix
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No shit statement of the year.

Fri, 02/15/2013 - 18:51 | 3248034 IridiumRebel
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+1

Fri, 02/15/2013 - 19:09 | 3248066 TruthInSunshine
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  "He clarifies that this is not a “Lehman moment.""

 

But the chances are good we'll have another "Lehman moment" sooner rather than later, even if no one now knows what it will look like with specificity, thanks to a larger notional aggregate bubble (affecting an even wider swath of asset classes than prior bubbles have) than we've seen in most of our lifetimes, thanks to absolutely radical, coordinated, central bank monetary fail-policies. 

When that moment arrives, they'll declare that "noone could've seen it coming," and then proceed to panic and throw reams of fiat/credit/debt at the wall to see what sticks in terms of attempting to sooth nerves and in pretending to take concrete steps towards stemming the "new, larger" crisis (that's actually merely an extension of the existing crisis born of the current monetary policy radicalism).

Fri, 02/15/2013 - 19:15 | 3248091 King_of_simpletons
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"Lehman Moment" is after the crash.

Fri, 02/15/2013 - 20:21 | 3248251 The Alarmist
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I see that the move to Yahoo did not do much for her pay situation ... same cheap, crappy outfits.  Lauren got much better exposure on RT, where you could actually find her stuff without having to look too hard.

Fri, 02/15/2013 - 20:41 | 3248309 Killtruck
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I'd like to find her stuff...

Sat, 02/16/2013 - 11:04 | 3249311 dark pools of soros
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I'd like to stuff her stuff

Fri, 02/15/2013 - 20:45 | 3248320 Deo vindice
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Some of the outfits she (barely) wore on RT certainly did give her a lot of of exposure.

Sat, 02/16/2013 - 00:04 | 3248747 Buckaroo Banzai
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She looks fantastic here. Frankly I prefer her dressed more conservatively. I'm so sick of seeing (not to mention hearing) the garden-variety news sluts. She's a class act, it's nice to see her dress like a class act too.

Sun, 02/17/2013 - 02:38 | 3250884 NumNutt
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You're right she is a class act......that would look great in a thong bikini.....

Fri, 02/15/2013 - 20:46 | 3248324 ihedgemyhedges
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"where you could actually find her stuff without having to look too hard."

If I found her stuff, IT would be hard...............

Fri, 02/15/2013 - 20:47 | 3248328 Trimmed Hedge
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Sell stocks.. & buy PIMCO bond funds!

YAY!!

Fri, 02/15/2013 - 19:15 | 3248093 nope-1004
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So much for that "new normal".  I agree that "The other camp believes asset prices are going to come down to meet the fundamentals. El-Erian puts himself in the second camp".

But it is the CB response to the retracement that will send shockwaves throughout the currency land.

 

 

 

Fri, 02/15/2013 - 19:19 | 3248098 Mr Lennon Hendrix
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Yep.  If stocks dip below DJ 13k then I bet Bernanke begins buying $140B/mo of bonds.

Spiraling down the toilet bowl....

Fri, 02/15/2013 - 19:30 | 3248126 derek_vineyard
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when the next lehman moments hits, in retrospect everyone will realize it was due

Fri, 02/15/2013 - 19:33 | 3248136 King_of_simpletons
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And CNBC will run an overnight marathon where Maria Bathroom will be screaming how this is all quiet unexpected and no one could have predicted the crash and the subsequent turmoil.

Fri, 02/15/2013 - 20:07 | 3248210 knukles
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And poor Mandy Bigtits'll sit there crying, Steve Liesman'll be saying that everything's getting better when the bad numbers are excluded, the guest host, Paul Krugman will be screaming, I mean fucking screaming waving his hands all over, standing on the seat of his chair and still barley visible above the desktop, throwing Styrofoam cups (not banned in Inglewood) of cold coffee all over railing on about alien invasions and broken windows, Sorkin will sit staring at Mandy's bigtits while Kernan tries to get Santelli to tell everybody what happened and all Santelli'll say is I tolja so, tolja tolja tolja and nobody fucking listens to me you stupid bastards, I tolja, I fucking tolja.", so the producer has no option other than to cut to a dated rerun of "Amos and Andy", dedicated to the NAACP's birthday celebration held in Detroit's Cobo Hall in 1951, while everybody is yelling at the same time and nobody has any clue whatsofuckingever what is actually going on about them.

Fucking awesome I tell ya, awesome.

Fri, 02/15/2013 - 20:51 | 3248336 kaiserhoff
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I'd comment, knuks, but I wouldn't know how to improve on that;)

Fri, 02/15/2013 - 21:25 | 3248386 Yen Cross
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 That was so fucking funny knuckles. I pissed myself laughing over that rant! :-D  +1

Fri, 02/15/2013 - 21:07 | 3248373 klockwerks
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Now that was a great visual and would be great to see

Sat, 02/16/2013 - 11:10 | 3249316 dark pools of soros
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....and then Cramer storms in with an inflatable bull

Sat, 02/16/2013 - 16:05 | 3249970 easterner
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you guys are awesome. i could not stop laughing!!!

Fri, 02/15/2013 - 19:33 | 3248135 Never One Roach
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smells fishy

Fri, 02/15/2013 - 19:53 | 3248187 Unprepared
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that's because the can that's being kicked is a tuna can.

Fri, 02/15/2013 - 21:50 | 3248446 sunnyside
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That's Becky you smell, waiting for a delivery of "ketchup".

Fri, 02/15/2013 - 20:14 | 3248233 Downtoolong
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When that moment arrives, they'll declare that "noone could've seen it coming,"

They're already starting to cover their asses in the media. Krugman was on the tele the other day stating how he thought people were relying too much on the Central Banks to save the economy.  Gee Krug, do ya think? But, that never stopped him from rallying behind every reason the Fed could think of to print more money.

Of course, what Krugman was really saying is don't blame the Fed and the Banksters when the shit hits the fan, now that we all realize it definitely will because their policies have massively failed.

  

Sat, 02/16/2013 - 10:07 | 3249223 Bendromeda Strain
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I would think the next "Lehman Moment" that "nobody could have seen coming" will indeed be Meredith Whitney's Tragedy of the Commons. Remember that? There are still countless pension and annuity funds that only survive based on impossible rates of return. That impacts munis in ways that Main Street cannot ignore. Many of them are already dead, but like Mike the Chicken, they walk around headless.

Sun, 02/17/2013 - 10:13 | 3251110 Desert Rat
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When the SHTF this time, what could possibly be done to clean it up? If $1T a year is the problem, what's the solution? Will any amount of "printing" "help"? It seems to me we are f'ed any way you look at it... but until then, BTFD...

Thu, 02/21/2013 - 23:49 | 3265915 monkeyboy
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"He clarifies that this is not a “Lehman moment.""

 

Yep just putting it out there. Wouldn't want any surprises now would we...

 

 

Fri, 02/15/2013 - 20:00 | 3248202 jwoop66
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Yeah, but, more importantly, is LL no longer on Putins channel?   When did this happen?

Fri, 02/15/2013 - 19:00 | 3248050 Shell Game
Shell Game's picture

I can almost hear the studio derived canned laughter after these 'pull string' talking points...

Fri, 02/15/2013 - 19:28 | 3248122 kaiserhoff
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It's not easy to take investment advice seriously, when it comes from a Dude named Mohamed, with a lithp.

Then again, look at our arrogant POTUSPROMPTER.

Fri, 02/15/2013 - 20:19 | 3248248 knukles
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OMAllah, Jihad on your ass for that one

Fri, 02/15/2013 - 20:38 | 3248300 kaiserhoff
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Probably so, but the line forms the the right.

Fri, 02/15/2013 - 19:55 | 3248190 Pareto
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+1 and then on the next reel he argues that for growth in the economy there "has to be the right mix of government spending and tax".  He's talking out of his ass if he thinks some kind of tax and spend cocktail is going to generate growth since tax and spend of any kind has contributed to the shiticane were in now.  Just another fucking Keynesian with another dickhead thoughtcloud rolling off his tounge.

Fri, 02/15/2013 - 22:41 | 3248599 disabledvet
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how about if he said "i'm not worried because i think the American armored divisions will be rolling into Cairo by year end...or my name isn't Mohammed." Would that change your point of view? (you can still call him another "asshole Keynsian" of course. only "with a turban.") http://www.youtube.com/watch?v=U8XrE0FSQv4

Sat, 02/16/2013 - 08:33 | 3249133 Lost My Shorts
Lost My Shorts's picture

Come on guys, be real.  El-Erian only talks his (extremely large) book.  If he is talking down stocks, that means he wants to buy, and it's very bullish.  Don't hold your breath for any pullback. 

If El-Erian wanted to dump stocks, he would say they are undervalued.  Duh.

Fri, 02/15/2013 - 18:50 | 3248031 IridiumRebel
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Dude is totally right.....when WMT is stating it has never been worse.....SELL. Consumers are not consuming. We gotta shit sandwich about to be fed to all.

Fri, 02/15/2013 - 19:25 | 3248104 Rainman
Rainman's picture

The inattentive muppets are coughing up blood over their Xmas bills and Olameo gave em a 2% payroll shot in the ass as they were LEANING FORWARD !

Fri, 02/15/2013 - 18:53 | 3248032 francis_sawyer
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LongSoupLine... Please indulge us with a comment on El-Erian...

~~~

I'll handle the Lauren Lyster stuff... [which is totally different]

Fri, 02/15/2013 - 19:46 | 3248176 fuu
fuu's picture

Needs more pi-rats.

Fri, 02/15/2013 - 19:56 | 3248194 Hulk
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We seem to have lost slewie...

Fri, 02/15/2013 - 20:15 | 3248234 kaiserhoff
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I haven't see Madhedgefundtrader either, or is that the Dude who is up for Secretary of Defense?

Fri, 02/15/2013 - 19:57 | 3248197 francis_sawyer
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slewie... slewie... slewie...

Fri, 02/15/2013 - 21:19 | 3248201 fuu
fuu's picture

I voted for him. He should reincarnate as Slewie the Vice-prez.

Fri, 02/15/2013 - 18:52 | 3248035 CunnyFunt
CunnyFunt's picture

Lauren doesn't look as hot as she did at RT. No leg shots, WTF?

Fri, 02/15/2013 - 18:57 | 3248045 Wile-E-Coyote
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She's still a dirty bitch.

 

Fri, 02/15/2013 - 19:04 | 3248056 Mr Lennon Hendrix
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Get laid.

Fri, 02/15/2013 - 19:09 | 3248074 Wile-E-Coyote
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I bet she has seen many a cock, ohh those lips.

Fri, 02/15/2013 - 20:05 | 3248213 Wile-E-Coyote
Wile-E-Coyote's picture

Hey, why the down votes? How the hell did Lauren get where she is, get real FFS.

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