Wednesday, April 8, 2009

PIMPCO Strikes Again

There wouldn't be any chance that PIMCO went "all in" with their investments in China and now have to talk their book, would there?

Not like we've seen that on a regular basis with them. I remember an analyst report from a PIMPCO VP in Asia asserting that they were believers in the 'decoupling' story and felt that China would see relatively minimal impacts.

Um, does it qualify as de-coupling when your economy and productive capacity is primarily constructed for exporting and not domestic consumption....and then exports fall 20-26% YOY in each of the last two consecutive months?

Think they may be looking into the abyss and trying to find the 'greater fool'?

Pimco’s El-Erian Says Emerging Markets Most Capable of Recovery

April 8 (Bloomberg) -- Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said emerging market nations that are running surpluses and willing to introduce “massive” fiscal stimulus plans have the greatest ability to recover from the global recession.

“China and Brazil are two that are leading the process,” El-Erian said from Pimco’s headquarters in Newport Beach, California, in an April 2 interview on Bloomberg Radio. “The key thing if you’re an emerging market investor is differentiation. This is not a time to treat the asset class as homogeneous.”

Pimco, the world’s biggest bond fund manager with about $747 billion in assets, expects global growth rates to slow from historical levels as household and business balance sheets shrink and place a smaller emphasis on borrowing to boost returns. Western economies such as the U.S. are going to recover more slowly because of the costs involved in reviving growth and reregulating the financial system, El-Erian said.

“You want to be investing in countries that have a creditor situation, that are running surpluses and have massive room for fiscal stimulus,” said El-Erian, who also serves as co-chief investment officer with Pimco founder William Gross. “Those are the countries that will get up quicker, and those are the countries where asset prices will outperform.”

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