Pimco’s El-Erian: America Isn’t Healing Fast Enough

The U.S. economy is healing but not growing fast enough to achieve escape velocity and break free from the pull of a fresh slowdown, says Mohamed El-Erian, CEO of Pimco, manager of the world’s largest bond fund.

Despite gloomy headlines such as those pointing to dismal jobs reports, there are some winds of recovery blowing in U.S. sails.

Corporate earnings are healthy and wealthy households remain poised to spend and invest to boost the economy. Housing appears to bottoming out and despite May’s jobs report, which showed the economy added a scant 69,000 net jobs, jobs are still being created.

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“Up until recently, the chaos caused by the Great Depression seems nearly inconceivable. At least, it was to influential Financial Times columnist Martin Wolf.

But in an editorial published yesterday, he writes that the euro crisis has led him to understand how fear and a lack of credible safety nets in the financial system can result in a disaster like the Great Depression:”

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To the moon Alice !

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Markets are certainly in relief rally mode as most markets ignore the lack of eventful news out of Europe. However Australia did post some better than expected GDP data and of course the world is waiting on the clam tomorrow.

Italy up 3.4%

Spain up 2.44%

Germany up 2.1%

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“(Reuters) – Morgan Stanley is considering selling a stake in its commodities unit, CNBC television reported on Wednesday, as regulatory pressures weigh on the outlook for the business.

The investment bank has been exploring a partial sale since at least last year and has talked to several parties, including private equity firm Blackstone Group LP , CNBC said, citing sources.

A Morgan Stanley spokeswoman declined to comment.”

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“Federal Reserve Bank of Atlanta PresidentDennis Lockhart said extending Operation Twist, the program to lengthen maturities of debt on the central bank’s balance sheet, is an “option on the table.”

“There is capacity to do more,” Lockhart said today in response to audience questions after a speech in Fort Lauderdale, Florida. “It is certainly an option. I’m not going to speculate on what the FOMC will do,” he said, referring to the Federal Open Market Committee.”

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“European Central Bank President Mario Draghi said officials are ready to add more stimulus to the euro region’s economy if necessary, while damping expectations that another round of three-year funding for banks is imminent.”

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3 D heat map ,

S&P A/D Line ,

NASDAQ A/D Line 

“Gold and silver are finally acting in the manner they should be again.  For months and months, gold (and silver as a more speculative gold trade) investors and speculators were having an identity crisis around gold as they couldn’t decide whether gold is a risk-on trade or whether it should be the ultimate reserve currency.”

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“If you’re a LinkedIn user, do yourself a favor and change your password right now — according to a new report from Dagens IT, nearly 6.5 million encrypted LinkedIn passwords were dumped onto a Russian hacker forum.

The news comes right on the heels of yet another user security kerfuffle, as the most recent LinkedIn for iOS update was found to transmit users’ meeting notes back to LinkedIn servers without their permission.

Of the millions of passwords dumped, Dagen IT reports that nearly 300,000 of them have been decrypted so far and that number seems sure to grow as users spread that hefty file around.”

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Gazoline up 3.35 million barrels

Distalates up 2.3 million barrels

“After months of resisting external aid, Spanish budget minister Cristobal Montoro said European institutions should help shore up the nation’s lenders.

In fact reports suggest that there is a plan in place that would allow Spain to recapitalize its weakest banks with help from European partners.

But in a Financial Times editorial, PIMCO’s Mohamed El-Erian says there’s a reason Spain had long avoided emergency European funding:”

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What a dog with fleas….

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“In the good ol’ days, we would worry about bond yields (and thus bond prices) compared to silly things like the inflation rate, dividend yields, mortgage rates, etc.  But it is a brave new world now.

The key driver for valuing Treasury bonds at the moment is the utility they offer as a form of collateral among banks loaning money to each other.  So with Europe’s debt markets in even greater turmoil now than when Greece’s debt got a “haircut” last year, T-Bond prices are zooming up once again to the top of the 3-decade rising trend channel.”

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+3.4%

Gapping up

ACOM +24.2%, LEE +21.7%, IRM +14.1%, TEF +4.9%, NOK +4%, CSTR +3.6%, GWRE +3.1%,

CHK +2.9%, ULTA +1.9%, SD +1%, CLNE +4.4%, GRPN +3.3%, FB +2.5% , MA +1.9% ,

SGEN +1.4%, SVNT +3.1% ,  CSTR +3.6%,  DRYS +7.8%,

Gapping down

MFRM -13.1%, MIND -12.6%, BOBE -6%,  VSH -1% ,  PPO -0.5%, AMLN -1.3%, KMI -3.4% ,

SCSS -15.9%, TPX -42.6%, MFRM -14.4%, MIND -10.4%, BOBE -6%,