This is an extended version of the profile that appeared in the May issue of Investment Advisor, part of AdvisorOne's Special Report profiling this year's members of the IA 25, the most influential people in and around the advisor universe. See the complete list and Special Report schedule for extended profiles of all the 2011 members of the IA 25.
Besides being at the helm of the world’s largest bond fund, Mohamed El-Erian, PIMCO’s CEO and co-chief investment officer, has become the go-to guy for deciphering what the upheaval in the Middle East and North Africa–as well as the latest tragedy in Japan–means for the global economic environment.
El-Erian, the son of an Egyptian diplomat, told Investment Advisor in early April that “the uncertainty premium has increased” in what he calls the “systemically important” Middle East. This uncertainty, he said, is being “reflected in high and volatile oil prices which, for the U.S. and other countries, translate in both a negative supply shock and a negative demand shock: production input prices go up and consumers have less money to spend on goods and services.”
What looms as a major threat for the global economy, El-Erian said, is that the disruptions in the Middle East “spread to other oil exporting countries, resulting in a further spike in oil prices and an even larger uncertainty premium.” The long-term stability of this region, he continued, “requires that governments respond to the legitimate demands of their populations in an orderly, timely and sustained manner.” The Middle East has “now started a journey towards greater democracy and individual freedom,” he continued. However, “the process is neither immediate nor linear. As Egypt is finding out, there are bumps along the way, and simultaneous progress is required on three fronts: political, economic and social.”