PIMCOs El-Erian: Best-Case European Outcome Has Less than 50% Chance
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Earlier in the session, PIMCO CEO and co-CIO Mohamed El-Erian issued some comments in a CNBC interview with regard to the European crisis.
El-Erian says investors should be ready for three possible outcomes in Europe, including the worst case scenario of a potential break up.
Key factors El-Erian alluded to include bank stabilization as the primary factor, then debt containment and growth promotion within the union.
Though Germany had somewhat of a shortfall with it's debt sale last week, Italy was able to get a full turnout to its offering, though at euro era-high yields.
So, El-Erian sees three outcomes as:
The most positive outcome, El-Erian contends, is all euro members agreeing to reforms, and the European Central Bank (ECB) going 'all in' in supporting the measure. But he thinks that chance of that happening is less than 50 percent.
U.S. markets are mixed in the late-Tuesday trading session.
El-Erian says investors should be ready for three possible outcomes in Europe, including the worst case scenario of a potential break up.
Key factors El-Erian alluded to include bank stabilization as the primary factor, then debt containment and growth promotion within the union.
Though Germany had somewhat of a shortfall with it's debt sale last week, Italy was able to get a full turnout to its offering, though at euro era-high yields.
So, El-Erian sees three outcomes as:
- Fragmentation of the euro zone, in which each of the 17 member nations go their own way. This would probably shake up the global economy.
- Agreeing to a full fiscal union, where members would adopt financial reforms that would be more political in nature than anything.
- Something in between, where stronger, smaller countries emerge, and three countries might default on debt, thereby exiting the union.
The most positive outcome, El-Erian contends, is all euro members agreeing to reforms, and the European Central Bank (ECB) going 'all in' in supporting the measure. But he thinks that chance of that happening is less than 50 percent.
U.S. markets are mixed in the late-Tuesday trading session.
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