Monday, December 28, 2009

PIMCO's El-Erian comes back to his "sugar highs"----again

What else is new?

What do you do if you miss a 85% rally in the NAZ and a 65% rally in the S&P in nine months?

You blame it on sugar.  As in "sugar highs!"

At 980-1010 on the S&P, El-Erian waxed about sugar highs. At 1040 he siad it was a brick wall, and then, we didn't have the "escape velocity" to break through. Now that we are above 1120, he ggoes back to "sugar highs" because PIMCO had already pimped McCulley in November saying that the economy was on a "slow slug."  Now enough time has gone by for the attention-deficit sufferers on Wall Street, that they can trot out El-Erian with the same story that didn't work four months ago, and try it again.  Sort of like the Doug Kass approach of calling the market top! But this time, the interview gets a front page in the LA Times, because maybe the  folks in La-La land will still buy what he's pimping!

NEW YORK (AP) — Homes are selling at their fastest clip in nearly three years, the unemployment rate is falling and stocks are up 66 percent since their March lows — the best performance since the 1930s.

What's not to like?

Plenty, according to Mohamed El-Erian, chief executive of giant bond manager Pimco. The investor says the recovery may be gaining steam but is no different than a kid who eats too much candy at one of the birthday parties his 6-year-old daughter attends.

"We're on a sugar high," El-Erian says. "It feels good for a while but is unsustainable."

His point: This burst of economic activity fed by government spending and near-zero interest rates will soon peter out.

As CEO at Newport Beach, Calif.-based Pimco, El-Erian, 51, oversees nearly $1 trillion in assets, more than the gross domestic product of most countries. So when he talks, people listen.
—Stocks will drop 10 percent in the space of three or four weeks, bringing the Standard & Poor's 500 index below 1,000 — though he's not predicting when.

—The unemployment rate will be hovering above 8 percent a year from now.

—U.S. gross domestic product will grow at an average 2 percent or so for years to come — a third slower than we're used to.

8% unemployment in a year? How is that a sugar high? 2% GDP? S&P below 1,000? What happened to the S&P below 600? Where's that forecast?

You want to know where  PIMCO's El-Erian ill fated advice and wisdom comes from when he blows his own horn?

He forgot about comrade Barry's stimulus plans!

Even after our Government allowed PIMCO to front run almost $200 billion of mortgage purchases on behalf of the taxpayer, to line PIMCO's pockets!

And now, our Government has given Fannie and Freddie more unlimited lines, to create another warehouse that never was.

Just look at the action on the NYSE today, and check out the most % ups.

What do you see?

Its full of Fannie and Freddie and their preferreds, basking in the glow of Government largess.

Which means its time for the stock jockeys to squeeze the shorts on AIG again!

They've just gotten another sugar pill!


Anonymous said...

Are you the only guy that tells it like it is?

That dude has been so wrong on stocks it isn't even funny

all he does his talk his own book

Anonymous said...

People made more returns in equities in the past 6 months than 10years in a bond fund, hah!

whydibuy said...

Its a great sign for the bulls.

As long as bears like El-Erian get media coverage, the bull market will continue to climb its wall of worry.

When these guys like Kass start seeing bullish signs and are promoting a 10% future gain, then its time to step aside. Untill then, enjoy the ride.

Anonymous said...

The FDR ride wasn't straight up.