Prepare For Huge Stock Market Swing, Predicts El-Erian

No one can tell you with any certainty what the stock marker with do on any given day, but one person I would pay attention when it comes to reading the market is  Mohamed El-Erian, the ceo of PIMCO, the largest bond fund in the world.

Based on both macro fundamentals and technical data, El-Erian wrote in a column for CNBC this weekend, that he expects either a major down or up movement soon in our stock market.
Why? Europe and the U.S. politicians unable or unwilling to make hard decisions to get us through the difficult financial issues.


That deer in the headlight look in politicians’ eyes is causing havoc in the stock and bond markets around the world as investors fearing the worst are pulling back, selling assets, and refusing to take risks on anything related to non-German debt.

“Liquidity is patchy, volumes are down, some bid-offer spreads are gapping, and there is little appetite among Wall Street intermediaries to warehouse risk – all pointing to some clogging in the pipes that allow for the normal and efficient functioning of markets,” El-Erian writes.

“Not surprisingly, signals of market stress are increasing, with a growing number of measures now flashing yellow and some on the verge of flashing red. The longer this persists, the greater the risk of very large market moves – in either direction, depending on the economic and financial catalysts.”

While El-Erian could be wrong, it is worthwhile to read his whole column.

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