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

Submitted by Tyler Durden on 02/15/2013 18:46 -0400

"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.

One camp believes that everything will go higher and central banks will succeed in their efforts.
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,"

Click image for full clip:

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Fri, 02/15/2013 - 20:43 | 3248314 knukles

Aaaaragh!
And that fucking Boombug now wanting to have 20% of all the parking spots in the city be reserved for electric cars.
Mikey, talked with ConEd about this yet, have ya?
Maybe they'll run on fucking Styrofoam.

Sounds like something SanFran would try.

Jesus, talk about kooked out shit, man....

Sat, 02/16/2013 - 06:03 | 3249046 StychoKiller

So glad to be in a little town no one's ever heard of... :>D

Sat, 02/16/2013 - 10:00 | 3249211 andrewp111

Bloomie has become a clown. He needs to be put out to pasture.

Fri, 02/15/2013 - 19:57 | 3248198 ebworthen

O.K., now I'm worried about Gold, because Cramer is talking it up tonight.

Fri, 02/15/2013 - 20:01 | 3248205 Atomizer

If you have physical, sit tight. If you own paper, your toast.

Fri, 02/15/2013 - 20:14 | 3248230 ebworthen

Roger that, physical it is.

Cramer was talking up the GLD, so you have a point.

Fri, 02/15/2013 - 20:26 | 3248264 Atomizer

Russian meteorite fragments will soon remonetize gold & silver paper trades.

/sarc

Fri, 02/15/2013 - 20:23 | 3248255 The Alarmist

El Erian ... Al Quaeda. Coincidence that they sound alike? If he's dissing stocks, he must be anti-American, so there's gotta be a drone for him out there somewhere.

Fri, 02/15/2013 - 20:29 | 3248274 Super Broccoli

Lauren what's that ugly dress of yours ?

Fri, 02/15/2013 - 20:43 | 3248305 Atomizer

How many TV producers does it take to get to the tootsie roll pop?

Fri, 02/15/2013 - 20:51 | 3248335 steveo77

The chances that this meteor and the asteroid are unrelated is indeed "astronomical", in fact the odds are against it by at least 5.5M to 1. Calcs are shown on the link.

NASA immediately weighed in that the meteor was just a coincidence as "it appeared" to come from a different direction......makes me say hmmmmm

The odds that the powers that be and the scientists at NASA who proclaimed repeatedly that there was no danger to the public, well the odds are that they are feeling a bit sheepish over their lack of ANY warning that parts of the Asteroid field could hit the earth, and as this one did packing the equivalent of 20 nuclear bombs of energy.

Proof here, exposing truth
http://nukeprofessional.blogspot.com/2013/02/debris-field-in-front-of-asteroids.html

Sat, 02/16/2013 - 11:40 | 3249340 dark pools of soros

The weather channel is just mad they didn't have a chance to name and pimp the meteor

Fri, 02/15/2013 - 20:52 | 3248337 orangegeek

SP500 hourly continues to move sideways in a crawlspace of about 20 points - FOR THE LAST THREE WEEKS.

http://bullandbearmash.com/chart/sp500-hourly-continues-crawling-sideway...

Thanks Fed.

Fri, 02/15/2013 - 20:52 | 3248340 nmewn

I don't know why...just cuz.

http://www.youtube.com/watch?v=RkK21V5hN2s

Sat, 02/16/2013 - 09:22 | 3249165 Downtoolong

Once again, we the wealthy and those on Wall Street who primarily work for us would like to thank all you poor dumb schmucks who were forced to fund this wealth building and wealth transfer extravaganza for us.

You will forever be in our debt.

Now, which one of you Muppets is ready to step up and buy my expensive stock? Come one, you know you want to. If you don’t do it, the Fed will probably do it for you eventually anyway.

Sat, 02/16/2013 - 10:06 | 3249218 MyBrothersKeeper

Japan has shown the shell game can go on for a long time...and the last 18 months has shown that's still true. Have part of your allocation in stocks/ETF's and know what you will do once things turn. For example, when people quickly start jumping back into treasuries you can jump into TLT. But there is no sense trying to be proactive as now the central bankers seem to all be in lockstep. To me that means you should just believe they will paper over any problem with skewed stats, babbling lies from anyone and everyone etc. The last few weeks have shown that they can quickly CYA despite what any real data suggests. The good news is you will probably know when things are becoming out of their control/grasp. First you will see them using cards they are holding in reserve....like Obama suddenly approving keystone pipeline etc. Then you will see them having press conferences about indy issues like gas prices etc. If the sysytem takes any kind of shock or lack of improvement after they have played those cards....that should tell you they are losing control

In the near term, sequestration, debt ceiling etc will likely see them allow a 5-7% correction before another ramp up. Just my opinion.

Sat, 02/16/2013 - 10:20 | 3249241 _ConanTheLibert...