Pimco’s Mohamed El-Erian sees stagflationary shock from Arab turmoil

Global fund management giant Pimco’s Mohamed El-Erian who is a native of Egypt gives his take on the unrest in the Middle East. He says sell equities because this is a ’stagflationary wind’ for the world economy. Somebody was clearly listening last night.

Famous for its ‘new normal’ forecast of lower growth and higher inflation, Pimco sees the oil shock as further confirming its thesis. Higher oil prices and greater risk aversion are coming. Global economies are going to have to live with higher oil prices. But he does note some hopeful progress in Egypt.