El-Erian's Summary: "Virtually Every Market Is Trading At Very Artificial Levels"

Tyler Durden's picture

"In order for central banks to achieve their ultimate economic objective - which is growth and jobs - they have to push investors into taking more risk than is justified," is the somewhat chilling warning that PIMCO's Mohamed El-Erian gives in this excellent interview with the WSJ. "Central banks are operating through the wealth effect and animal spirits," El-Erian says peeling back the truth onion, as they prop up asset prices to "artificial levels, in virtually every market." Worries over the central bankers of the world withdrawing easy money policies too early are "unwarranted," he notes, adding that he suspects, "they will most likely stay too long and they will consciously make that mistake." Critically, though, he sends a message that appears to fit with many of our recent discussions (most recently here) that "if these levels aren’t validated by the fundamentals, then investors will get hurt."


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Seasmoke's picture

How do you say, NO SHIT, in Arabic

thismarketisrigged's picture


wow, i really thought these prices were actually fair value for stocks. i didnt see any artificial inflation in this great stock market.


its all up on the '' great'' fundementals we have had of late 




i just hope this crash happens soon, but from what we have seen too often with every down day followed by a monster up day, its going to be tough as long as ben is the head of the fed

zorba THE GREEK's picture

When every game is rigged, soon no one will show up to play. 

Manthong's picture

But also, how do you say SHERLOCK in Arabic?

BigJim's picture

 Interviewr: "will we see a QE3?"

Er, what? When did this come out? 

espirit's picture

WSJ rerun from 2011.  See page 2 posts for link.

Ahmeexnal's picture

Bitcoin trading artificially high today:


Sadly, thousands of argentines, cypriots, greek, spaniards, italians, french, dutch, and other people who bought into the bubble over $250 after being deluded by BTC trolls have now lost all their life savings.

Wealth transfer from the sheeple to the oligarchs, one bitcoin at a time.

TraderTimm's picture


Yeah, we get it - you don't think bitcoin has a place in our government-dominated world.

The best part is -- that isn't up to you.

howenlink's picture

Long Playstation and Nintendo.

Greyhat's picture

Long taxes! :)

Some cash demand for paying taxes seems to be enough to break bot dominated "markets".

HD's picture

"When every game is rigged, soon no one will show up to play."

The WWQE wrestlers show up. Fundamentals are the ropes and gettin' a beat down.


Imminent Crucible's picture

You gotta understand the difference between a game and a show.  The wrestlers are paid to show up and "play". The Fed has destroyed our capital markets by paying the primary dealers to show up and pretend to be battling each other, when it's all about taking your money to cover the craters in their balance sheets.


lotsoffun's picture

so wrong and been proved for 5 years now.  the game is rigged, just like power ball and mega whatever.  the primary dealers borrow for zero - and check out the interest rate on your student loans and credit cards.  that's not what they are advertising as 'recovery'.  so check out the interest rate on your 'recovered' mortgage and auto loan.

the primary dealers are into play everyday and there is basically no way but up.  and eventually the muppets get in, because it is all looking just so good.  and right now - they've been told not to sweep the table.  too much.  but i bet if you did a look at who sold the last few days - and then who bought back cheap, was it the muppets?  primary dealers make money on volatility, not everyday up.

can you really believe the last few years statistics like - gs, ms, bac, jpm, c made profit EVERY SINGLE TRADING DAY OF THE QUARTER FOR 4 QUARTERS??  really.  wow - what genuis bunch.

wake up.


Stoploss's picture



I think you have to scream it to get the proper effect.

B2u's picture

Press the lower right speaker to hear how to say it.

razorthin's picture

Thank you.  My mother bore me head to floor and rendered me incapable of reading universal symbology.  Fortunately, I can program lower level languages.

prains's picture

How do you say, NO SHIT, in Arabic


Smelly Snackbar, Smelly Snackbar!

stocktivity's picture

Hey El...what you're saying is "It's all Bullshit!!!"   I've been saying that for a lot longer than you.

dcohen's picture

U say, "La lo zaki", which means something similar to "No shit smartass".

Kirk2NCC1701's picture

?? ????  The Arabic for 'No joking' got replaced by these question marks.  So sorry.

yogibear's picture

It took him this long to state the obvious.

razorthin's picture

"if these levels aren’t validated by the fundamentals, then investors will get hurt."

Jesus, Mohamed.  Wasn't that stake in the ground long ago??

DeadFred's picture

Dang, they trot El Erian out to spout his stuff when they want little guys to sell so the inside money guys can buy cheap. I want to see something that says the big money guys are scared.

NoDebt's picture

Lot of company insiders cashing out recently and very few buying.  Not that they're much smarter than anyone else, but it's looked on as a signal by many.

What I know is that people sell for many reasons.  But they only buy for one.

Common_Cents22's picture

yep, flush out gold, flush out little guy, then Ben will slap a turbo on the money pump.   to the moon alice!!!!

Shizzmoney's picture


I want to see something that says the big money guys are scared.

This wont happen until a bank CEO is killed, or a bank is bombed.

If you are talking about market "risks" to big money, ain't happenin'.  That's why they pay off their cronies in government via lobbyists and stocks - to get their bailouts.

insanelysane's picture

But the new fundamentals include Banksta Ben and infinite QE so there is validation.  The Fed can stop QE but can never unwind it.  At least not this century.

scatterbrains's picture

So the spin is  Mr Bernank is doing everything he can to create jobs and it's not that he's pumping stocks up to help his buddies dump out at higher levels.  So when it all comes crashing down after the connected have unloaded first of course,  we're all suppose to be thankful that nice man Mr. Bernank tried his best for us. 

TheMonetaryRed's picture

And what are the fundamentals of gold? 

Needed by whom for what at what price?

The party's over. 


Gold to $900

espirit's picture

...and that would put spot silver at what?  Considering the everpresent >60 to 1 ratio...

It'll never fuckin' happen.

TheMonetaryRed's picture

1. Silver has already gotten clobbered badly. 

2. There is no such thing as an "ever-presernt > 60 to 1 [gold/silver] ratio"


SIlver goes to $18 dollar and sits at or below $20 for a while. 



espirit's picture

Central Banksters' Wet Dream.

TheMonetaryRed's picture

I'm pretty sure that Cental Bankers barely even notice the silver market, much less care about it except that it's a component of GSCI. 


Oil is the dominant global commodity. 

Croesus's picture

HAHA...joke of the day.

Gold can be $10,000 or $100. It doesn't matter. What matters, is whether or not you have any. 

"Needed by whom for what at what price?" <-- Ask a Central Banker.

Only ownership and perception matter.

Dishonesty Fatigue's picture

Needed by the same people who needed it 3000 and 300 years ago.

At any price - if that price is just a number on a piece of government toilet paper.

TheMonetaryRed's picture

No, not any price - a price that used to be about $1800 and is now about $1300 - or that used to be about 20 barrels of oil and now is about 15. 



Dishonesty Fatigue's picture

So what? A movie ticket used to cost $5 and now it costs $15, but the movies aren't any better than before. A gallon of milk used to be $1 and is now $4, but it's the same milk. A shirt that was $50 yesterday is on sale for $35 today, but the shirt is the same. Price is very different from value, and value changes very little over time, up or down.

vulcanraven's picture

Production costs>spot price


good game sir

ebworthen's picture

Keynesian money printing/saver punishing central bankers heads to $0.

Pancho Villa's picture

Gold to $900

Think so? Then you absolutely must buy DGLD.

ebworthen's picture

Gold at $1,369 right now; lucky in China and lucky in bed.

seek's picture

That could happen. But doubtful.

If it does and physical is available for sustained duration at that price, it means the average single family home will be selling for $45K, and while they won't repeal the minimum wage,  the average workweek will be 15 hours at best.

About 9 months after that happens, I guarantee you'll be missing a zero on that price.

TheMonetaryRed's picture

Gold is a global commodity. It should not and does not have any special relationship with American house prices. 

Kirk2NCC1701's picture

Are you a total air-head, or do you have to work at it?

TheMonetaryRed's picture

Are you a buyer at $1350 or are you a talker?



FieldingMellish's picture

The correct view is $1 is now 1/1376 oz. Gold just is. 170000 tonnes growing at about 1.2% per year. Its the dollar that is fluctuating in value.

TheMonetaryRed's picture

Okay, then USD to 1/900 oz of gold. Since you can't buy fewer things with gold than you can buy with Bitcoins, who cares?