The stock market has gotten ahead of reality, Pimco’s co-chief executive officer Mohamed El-Erian told CNBC Friday.
“Stock investors are making overly optimistic assumptions,” El-Erian said. “The key stimulus has already come into the consumer and has helped in the last few months. But for the 3rd and 4th quarters looking ahead, I’m not so sure things will be as good.” According to El-Erian the economy is currently getting boost from stimulus but growth may not be durable.
Asked about T. Geithner’s comments this week that a considerable amount of risk has been taken out of the system, El-Erian said “he [Geithner] was talking about banking and that has been derisked….but there are other areas, like commercial real estate that haven’t been resolved yet when it comes to risk.”
El-Erian also said that more stimulus has made it into the economy that people realize and that current valuations are not warranted by the outlook for fiscal 2010.
Wow… never has a greater BUY singal flashed, than a BOND guy positioned wrong trying to talk the market down.
BUY STOCKS – with both hands..