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Friday, July 18, 2008

Pimco Executive: More Economic Pain Coming

FOXBusiness

Pimco Co-Chief Investment Officer and Co-chief Executive Mohamed El-Erian sees more pain for the U.S. economy.

“I think for the consumer the worst is still ahead; there’s going to be higher unemployment, unfortunately, there’s going to be lower values on housing, so lower wealth—there are still some rough patches,” El Erian said, in an interview with Fox Business Network anchor Brian Sullivan.

El-Erian’s new book When Markets Collide, focuses on what investors can do to protect their assets amid a rapidly changing global economy. He recommends that all investors ask whether or not they can hold onto their investments.

“We’re going to go through massive swings, massive volatility. The key thing for any investor is to say, ‘can I hold onto my investments?’ You don’t want to be a forced seller,” El-Erian said.

El Erian told Fox Business that investors should be sure to have enough international exposure and inflation protection.

Click here to watch the second part of the interview

Despite his belief that inflationary pressure will become a real concern in the future, in the short term, El-Erian said the Federal Reserve will keep interest rates at low.

“I think the Fed stays at 2.00% for awhile; I think the Fed focuses on stability of the financial system,” he said.