Posted By thestatedtruth.com on July 27, 2010

“Noisy” economic reports underscore the “unusually uncertain” outlook cited by Federal Reserve Chairman Ben S. Bernanke, according to Pacific Investment Management Co.’s Mohamed El-Erian.

Corporate earnings are backward-looking, and the key economic issue is the U.S. labor market, El-Erian, Pimco’s chief executive and co-chief investment officer, said in a radio interview today with Tom Keene on Bloomberg Surveillance.

“The minute someone puts out a green light, and earnings constituted a green light, you’ll see people rushing back into risk markets,” El-Erian said. “The indicators that we look at suggest that the economy continues to lose momentum. The key is going to be ultimately is the economy creating enough jobs to make people comfortable, to allow companies to invest?”

Bernanke said on July 21 in testimony to the Senate Banking Committee that “the economic outlook remains unusually uncertain.”

Global growth will be below average during the next three to five years as developed economies struggle with mounting deficits and increased regulation in the wake of the 2008 collapse of credit markets in what Pimco calls the “new normal,” El-Erian has said.

The firm is advising investing more in emerging-market nations such as Brazil and China, which should continue to thrive because of stable levels of government debt and expanding middle classes.  Brazil is in a “developmental breakout phase,” El-Erian said in today’s interview.

 Pimco is a unit of Munich-based insurer Allianz SE.

More at:  http://www.bloomberg.com/news/2010-07-27/-noisy-economic-data-indicate-uncertain-outlook-for-growth-el-erian-says.html

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