El-Erian Predicts 2010 Hangover
Pimco CEO Mohamed El-Erian can move markets all by himself. With almost $1 TRILLION in AUM, the guy needs to be right more often than he's wrong. So when he says the party is almost over and compares the rally in the market to a 6-year old binging on Snickers bars at a birthday party, we'd probably do well to pay attention.
Among his predictions for the coming year are a call for a dramatic sell-off in the stock market amounting to 10% in a 3-4 week period, anemic growth in GDP for the next several years, and unemployment remaining above 8% at this time next year. All pretty believable.
"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.