Mohamed El-Erian on quantitative easing

Today's WSJ published the following brief synopsis of an interview with Mohamed El-Erian on quantitative easing:

Actions by central bankers across the globe are propping up asset prices to artificial levels that are potentially putting investors at risk, Pimco CEO Mohamed El-Erian said in an interview with the Wall Street Journal.

“Investors should recognize that in virtually every single market segment, we are trading at very artificial levels,” El-Erian told WSJ’s Francesco Guerrera. “It’s true for bonds, it’s true for equities. It’s true across the board.”

El-Erian said worries of central bankers pulling their easy money policies too early are unwarranted.

“We think they will most likely stay too long and they will consciously make that mistake,” he said. “In order for central banks to achieve their ultimate economic objective — which is growth and jobs — they have to push investors into taking more risk than is justified. The way central banks are operating is through the wealth effect and the animal spirit.

“If these levels aren’t validated by the fundamentals, then investors will get hurt.”