“As a New York Jets fan, I despair of all the talk about the New England Patriots,” El-Erian (left) begins. “Yes, they have an amazing combination in Coach Belichick and Quarterback Brady; and yes, they have incredibly talented tight ends and, in Wes Welker, one of the most dedicated players in football. But do I need to keep on hearing about it over and over again; and must I constantly worry about what the Patriots mean for the wellbeing of my Jets?
“I desperately want to wish the Patriots away, but I cannot. They matter.”
As does Europe, he says. No matter how much investors would like to ignore the continent’s crisis, it’s impossible given its sheer size, and it’s not going away anytime soon.
It should be noted the Patriots had three Super Bowl championships in the last decade; the Jets’ last championship was led by a guy in pantyhose (Joe Namath) in 1969. El-Erian fails to mention how this plays into his argument.
“Every week, if not every day, Europe influences stocks, overwhelms sector-specific news, and frustrates careful security selection,” he nonetheless continues. “The result is wave after wave of manic risk on and risk off days, together with spiking correlations and unsettling volatility.”
He notes that one week ago, markets were hoping that the ECB policy meeting and “yet another Summit of European leaders” would allow some respite from European stress. Unfortunately, he says, leaders once again failed to act decisively and an opportunity was lost.
“Don't get me wrong, the two events did produce important results,” he concedes. “Yet, given the scale and scope of the European crisis, they are not enough.”
His conclusion? Just as being a diehard Jets fan means the annoyance of forced interest in the Patriots, so, too, does being an investor of any stripe mean continued interest in Europe.
“European leaders still need to do a lot more, and quickly, if they are to catch up and get ahead of the crisis. Accordingly, and regrettably, the specter of volatility caused by European headlines will not recede for long. Investors need to continue to watch and worry about Europe ... and I have no choice but to continue to watch and worry about the Patriots.”