Tags: mohamed el-erian | stocks | north | korea | stupid | rally

El-Erian: North Korea Doing 'Something Stupid' Will Kill Bull Run

(Dreamstime/Michael-Borgers)

By    |   Monday, 09 October 2017 03:13 PM

Economic guru Mohamed El-Erian warns that it would take something mighty big to halt the soaring stock market’s recent bull run.

But the Newsmax Finance Insider explained to CNBC that such scenarios are much more realistic than your average investor would believe.

"You need a major shock or a major series of shocks to dislodge this market. This market is not dislodged easily," the Allianz chief economic adviser told CNBC.

Citing the potential "shocks" that he's worried about, El-Erian put North Korea "doing something not just brazen but really stupid and the U.S. reacting" at the top of his list, CNBC.com explained.

While he said he doesn’t "worry about the Fed," he admitted the potential next moves by the European Central Bank, the Bank of Japan and the People's Bank of China could be tricky.

"People get complacent," El-Erian said, warning of "excessive risk-taking" due to investors being "conditioned" to believe that central banks will always have their backs.

The early promise of a "synchronized economic recovery" around the world "is not yet strong enough to warrant and validate existing asset prices," he said.

"We're in the midst of a long and rewarding journey," he said.

To be sure, U.S. stocks have been on a tear this year, hitting new records almost everyday in the past week, and the upcoming earnings reports will help justify the lofty valuations, Reuters reported.

“The relatively high valuation, where the market is trading 17 to 18 times earnings, is merited by a very low interest rate environment,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

“We are not danger yet if you keep your eye on rates.”

Overall, earnings at S&P 500 companies are expected to have increased 4.9 percent last quarter, according to Thomson Reuters data, down from the double-digit growth recorded in the first two quarters of this year.

(Newsmax wire services contributed to this report).
 
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Economic guru Mohamed El-Erian warns that it would take something mighty big to halt the soaring stock market’s recent bull run.
mohamed el-erian, stocks, north, korea, stupid, rally
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2017-13-09
Monday, 09 October 2017 03:13 PM
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