Pimco's El-Erian: Seeing Global Growth Slowdown Now -CNBC

Pacific Investment Management Co. Chief Executive Mohamed El-Erian Thursday said he was worried by recent economic data on both the domestic and global level and doesn't see how corporate profit growth can be sustained within this environment.

In an interview on CNBC, the Pimco co-chief investment officer said: "I'm really very worried by the data. Not just in the U.S. We've had a string of bad data, but look overnight -- Brazil, France, China and Portugal and Greece -- all of them came in lower than expected, or they are tapping the brakes, like in Brazil. What we are having right now is a global growth slowdown."

He said this would hit top-line corporate revenue growth and put some pressure on profits and make it impossible "to sustain" within the economic environment.

Balancing what he calls the "structural impairments" of the economy, he said are lots of cash on balance sheets, especially among the multi-nationals, tremendous innnovation, and a manufacturing sector that is beginning to pick up. Nonetheless, he said he expected the economic "headwinds" would continue until Washington is able to come up with an overall economic policy that addresses housing, credit flow, public finance and the employment situation.

El-Erian noted that his company, with about $1.2 trillion in investments, had gotten out of its holdings in Greece, Portugal and Ireland "very early on" and thus was not suffering during the present European debt crisis.

In response to a query about Pimco's shedding of U.S. Treasurys, he said "it is stunning how quickly consensus growth rates have come down from 4% to 2% for one quarter." He said he'd never seen this happen so quickly, and that if there was a miscalculation, it was that he expected Pimco to continue to be an "outlier" longer and now was "consensus", which was very weird for them.

Re-emphasizing that he sees the overall situation with the economy as much more than a cyclical slowdown, he said, nonetheless, he felt the government has pumped too much overall liquidity into the system for there to be another "double-dip" into recession.

Full story at www.cnbc.com

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