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El-Erian: Markets Could Plunge 10 Percent in Coming Months

El-Erian: Markets Could Plunge 10 Percent in Coming Months

By    |   Friday, 25 March 2016 06:08 AM


Newsmax Finance Insider Mohamed El-Erian, the chief economic adviser at Allianz SE, warsn that it won’t take much to push a “range-bound market” into a plunge of 10 percent in the near future.

"Don't be surprised if you see a 5 to 10 percent move the other way, because that's what we've been having actually for a while now," the Allianz chief economic adviser told CNBC.

But he noted that falling markets can also "amplify" the effects of weakening fundamentals.

For the most part, he really wasn’t that gloomy but wanted to state the possible plunge a a possible outcome.

"Things in the U.S. aren't that bad," he said.

El-Erian outlined why stocks could overshoot in either direction. Liquidity injections from central banks and companies, through buybacks and mergers, can push rising markets even higher, CNBC explained.

Other experts agree that the problems that plagued investors to start the year haven’t disappeared, and it won’t take much to turn the market ugly again.

“Stocks have lately been alternating between the horrific and the benign. It was just a few weeks ago that the Standard & Poor’s 500 index was in freefall and the question on everyone’s mind was whether a bear market was inevitable. Those fears have been put to rest as U.S. economic data came in stronger than expected, oil prices stabilized, and concerns about China faded from the headlines,” Ben Levisohn explained told Barron’s.

“Not that you should get too comfortable: The good times could continue, but the issues that caused this year’s turmoil still lurk beneath the surface,” he said.

“But it wouldn’t take much to shake the market’s newfound equilibrium. The stability of the European Union could be called into question—again—as Britain prepares to vote on whether it will stay or go. Moody’s, meanwhile, cut its outlook on China’s debt to negative from stable, and it could be just a matter of time before China looms large for the market again.”

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Newsmax Finance Insider Mohamed El-Erian, the chief economic adviser at Allianz SE, warsn that it won't take much to push a "range-bound market" into a plunge of 10 percent in the near future.
el-erian, stocks, plunge, invest
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2016-08-25
Friday, 25 March 2016 06:08 AM
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