Wednesday, May 18, 2011

PIMCO: El-Erian on the Secular Outlook

Economic Outlook

May 2011
Secular Outlook:
Navigating the Multi-Speed World
  • Balance sheets, both across and within economies, are still out of
    equilibrium. We expect advanced economies will face sluggish growth and
    persistently high unemployment over the secular horizon. Emerging
    economies will achieve higher growth but face recurrent inflationary
  • We do not expect policymakers to boldly address structural problems.
    By targeting negative real interest rates, they will pursue financial
    repression that undermines the “real return” contract that savers
  • Secular baseline portfolio positioning should minimize exposure to
    the negative impact of financial repression, hedge against higher
    inflation and currency depreciation and exploit the heightened
    differentiation in balance sheets and growth potentials.

the article and a PDF are available Here

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