PIMCO’s El-Erian: Jets, Patriots and the European Crisis

“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.”