Tuesday, October 29, 2013

EL-ERIAN: Anyone Following Egypt Needs To Keep An Eye On One Useful Measure, And It's Not The Stock Market

El-Erian On Egyptian Credit Default Swaps - Business InsiderFeaturedTrendingRecentBusiness Insider Login Remember me I forgot username or password Login with Twitter Login with Facebook Login with LinkedIn Login with Google Register EventsBI IntelligenceTechFinancePoliticsStrategyLifeEntertainmentAll Tech Enterprise Science The 12 Most Offensive And Controversial Startups 15 Apps Everyone Is Talking About Right Now 10 Mind-Blowing Products Google Is Working On Right Now This Is The Incredible Cafe At Microsoft Where The Food Is Better Than... Microsoft's Big Re-Org Could Come Next Week With These Four Execs... Bill Gates Was A Huge Fan Of Xobni, The Email Startup That Yahoo Just... Microsoft Will Pay Ex-Windows Boss Steven Sinofsky For His Unvested... Google To Glass Users: Have Fun, But Maintain Eye Contact And Don't Act... 35 Science 'Facts' That Are Totally Wrong What America Will Look Like Under 25 Feet Of Seawater, Part 2 A Massive Whale Hunt On The Faroe Islands Turns The Sea Red Every Summer Your Testicles Have Taste Receptors Finance Markets Your Money Wealth Advisor The Sexiest Wall Streeters Alive An Ex-NYU Professor Was Arrested After Allegedly Sending Citi's Chief... Here's The Heleen Mees PhD Thesis That NYU Doesn't Want You To See The Saddest Gold Fund Investor Letter You Will Ever Read JPMorgan Put Together The Ultimate Guide To The Market Right Now ECB'S DRAGHI: We're Keeping Rates Low 'For An Extended Period Of Time' DEUTSCHE BANK: These Are The 33 Best Stocks You Can Buy Right Now The British Pound Is Plunging HUGE: White House Delaying Key Obamacare Provision For A Year These Are The Best And Worst Things To Buy In July Here's What Happens If You Don't Sign Up For Obamacare This Lottery Winner Is Becoming Our Favorite New Millionaire JPMorgan Put Together The Ultimate Guide To The Market Right Now The Saddest Gold Fund Investor Letter You Will Ever Read JEFF SAUT: This Is A Big Deal — A Major Second Half Risk Was Just... VANGUARD: Here Are 3 Reasons Why You Should Still Own Bonds Politics Military & Defense Law & Order MSNBC Just Had Its Most Dreadful Ratings Period In 6 Years OBAMA: I'm 'Deeply Concerned' By The Egyptian Military's Takeover HUGE: White House Delaying Key Obamacare Provision For A Year The Obama Administration's Excuse For Delaying The Obamacare Mandate Is... Egyptian Newspaper Has A Special Message For Obama On Its Front Page EGYPTIAN PRESIDENT OVERTHROWN BY MILITARY Here's The Moment Where Egyptian Security Forces Arrested Presenters And... Egypt Orders Mass Arrests Of Muslim Brotherhood Members George Zimmerman's Prosecutors Have Had A Huge Turnaround In His... Horrifying Video Is Just The Tip Of The Iceberg Of Cops Killing Dogs Former Professor Says He Taught George Zimmerman The Law He Claimed He... Dozens Of Skype Users Troll Witness Testifying At George Zimmerman Trial Strategy Careers Advertising Retail Small Business 12 Things That You Can Do That Are Guaranteed To Annoy Logical People The Most Connected Woman On LinkedIn Shares The Secret To Networking The 25 Most Desirable Employers For IT Graduates Humanities Grade Inflation Is Luring Away Millions Of Potential Scientists This Memory-Linking Technique Can Help You Remember Anyone's Name Former Dallas Cowboy Cheerleader Is The Go-To Designer For Breastaurants How To Really Listen To Others INSTANT MBA: If You're Not Deceived Regularly, You Don't Trust Enough... RANKED: The 30 Most Creative People In Social Media Marketing Here's What A Barbie Doll Would Look Like If She Had A Real Woman's... The TSA Is Instagramming Terrifying Objects People Wanted To Bring On... Newcastle Ale Is Trying To Invent A Pro-British, Anti-4th Of July Holiday RANKED: The 30 Most Creative People In Social Media Marketing Here's What A Barbie Doll Would Look Like If She Had A Real Woman's... The Broken Plus Size Industry Is On The Verge Of A Revolution If You Do These Things While Shopping, Retail Workers Probably Find You... The 12 Most Offensive And Controversial Startups Why It's Better To Sell A Startup For $20 Million Instead Of $200 Million Mehdi Yazdanpanah Has the Coolest Small Business In America Life Transportation 31 Reasons Why Everyone Who Lives In New York Should Actually Live In... The 50 Most American Americans Alive 34 Things Every New Yorker Should Do This Summer HOUSE OF THE DAY: Rapper Pharrell's Miami Penthouse Is Now Only $10.9... Two Jets Collided On A JFK Runway [PICTURE] My JetBlue Flight Was Going Perfectly... Until We Hit 10,000 Feet SUPERCAR FACE-OFF: McLaren MP4 12C Vs. Lamborghini Aventador Why Planes Can't Fly In Extreme Heat Entertainment Sports 12 Former Porn Stars Who Now Lead Boring, Normal Lives 21 Nearly Identical Pairs Of Movies That Came Out Around The Same Time Lou Reed's Review Of Kanye West's 'Yeezus' Is How All Music Reviews... 'Big Brother' Contestant Dropped From Modeling Agency After Making... The Most Sculpted Bodies At Wimbledon The 50 Most Influential People Behind The Scenes In Sports 20 American Athletes Who Only Americans Can Appreciate 17 Examples Of Michael Jordan's Insane Competitiveness Sections A-ZLatestAdvertisingCareersEnterpriseEntertainmentFinanceMarkets Law & OrderLifeMilitary & DefensePoliticsRetailScience Small BusinessSportsStrategyTechTransportation Wealth AdvisorYour MoneyYour NewsListsSilicon Alley 100Digital 100Silicon Valley 100Clusterstock 50The Most Important ChartsThe Life 50More »Sponsored SectionsThe Future of BusinessMonday Scouting ReportSmall Business, Big IdeasVideo RevolutionToolsHiveJob ListingsDocument CenterAccount PreferencesRegisterVideoMobileFull ArchivesAbout BIAboutJobs at BIMastheadContactAdvertiseContributors FAQLegal Fine PrintFollow BINewslettersAlertsRSSTwitterFacebookLinkedInGoogle+CompaniesAuthorsCategories From To You have successfully emailed the post. Markets More: Mohamed El-Erian Egypt EL-ERIAN: Anyone Following Egypt Needs To Keep An Eye On One Useful Measure, And It's Not The Stock Market Mohamed El-Erian, Contributor Jul. 3, 2013, 1:29 PM 3,917 Tweet!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs");EmailShare on Tumblr

Mohamed El-ErianREUTERS/Fred Prouser

Mohamed A. El-Erian, CEO and co-CIO of PIMCO, takes part in a panel discussion titled "Global Markets in Uncertain Times" at the Milken Institute Global Conference in Beverly Hills, California April 29, 2013.

$('.icon-tooltip').tooltip(); Mohamed El-ErianMohamed El-Erian is CEO and co-CIO of PIMCO.

Recent PostsEL-ERIAN: The Next Few Days Will Be Critical For The Global...EL-ERIAN: The Fed Better Be Right About The EconomyEL-ERIAN: The Market 'Sucking Sounds' Are Getting Louder As Four...With all the focus on Egypt today, people are scrambling to find a simple market-based measure that speaks to both the extent of the economic disruptions and the potential financial spillover effects on other countries.
The most commonly-viewed Egyptian chart – stock market prices – is not the right one. There is another one; and while better (and, maybe, even the best in relative terms), it is far from comprehensive.

This better data series measures the spread on the 5-year CDS (credit default swap). It is a good – not perfect – market indicator of sovereign risk; and it dominates the information content provided by the much more popular stock market index.

The higher the spread (and it just traded at around 1,000 basis points), the harder it is to encourage investment in new plant and equipment; the more difficult and expensive it is to secure trade financing (including for critical imports of food stuffs and other basic needs); and the lower the job and income opportunities for average Egyptians. And all this speaks to the bigger issue: A struggling economy is both a source and a consequence of Egypt’s current political tensions.

As insightful as this data series is, it does not capture however the potential spillover effects. Indeed, even the analytics of this particular contagion question is quite complex.

Measured by traditional economic and financial variables, Egypt’s regional and global network effects are quite limited. This is true in terms of the usual measures, including trade links, global demand and supply influences and cross-border financial interactions.

But this does not mean that Egypt has no systemic effects. It remains the largest and most influential country in the Arab region. It is a significant geo-political actor in an important part of the world. And the demonstration effects could extend quite far and wide.

The bad news is that there is no single simple measure that comes anywhere near to capturing all this. The good news is that the CDS spread provides useful insights into one of the underlying contributing factors.

To embed this post, copy the code below and paste into your website or blog.600px wide (preview)400px wide (preview) 300px wide (preview) Alerts Newsletter URL Recommended For You 8 Subliminal Messages In Corporate Logos You've Never Noticed Before   8 Subliminal Messages In Corporate Logos You've Never Noticed Before   More: Mohamed El-Erian Egypt Get Alerts for these topics »

Advertisement:Join The Discussion OR Login With Facebook Login With Twitter Login With Google Submit the comment for Insider Status Comments Insiders0All Comments0 Apply To Be An "Insider" » Loading Loading EL-ERIAN: Anyone Following Egypt Needs To Keep An Eye On One Useful Measure, And It's Not The Stock Market EL-ERIAN: Anyone Following Egypt Needs To Keep An Eye On One Useful Measure, And It's Not The Stock Market

The better indicator of sovereign risk.

AdvertisementGet Markets Emails & AlertsLearn More »IndustryAccountingAirlines/AviationAlternative Dispute ResolutionAlternative MedicineAnimationApparel & FashionArchitecture & PlanningArts and CraftsAutomotiveAviation & AerospaceBankingBiotechnologyBroadcast MediaBuilding MaterialsBusiness Supplies and EquipmentCapital MarketsChemicalsCivic & Social OrganizationCivil EngineeringCommercial Real EstateComputer & Network SecurityComputer GamesComputer HardwareComputer NetworkingComputer SoftwareConstructionConsumer ElectronicsConsumer GoodsConsumer ServicesCosmeticsDairyDefense & SpaceDesignEducation ManagementE-LearningElectrical/Electronic ManufacturingEntertainmentEnvironmental ServicesEvents ServicesExecutive OfficeFacilities ServicesFarmingFinancial ServicesFine ArtFisheryFood & BeveragesFood ProductionFund-RaisingFurnitureGambling & CasinosGlass, Ceramics & ConcreteGovernment AdministrationGovernment RelationsGraphic DesignHealth, Wellness and FitnessHigher EducationHospital & Health CareHospitalityHuman ResourcesImport and ExportIndividual & Family ServicesIndustrial AutomationInformation ServicesInformation Technology and ServicesInsuranceInternational AffairsInternational Trade and DevelopmentInternetInvestment BankingInvestment ManagementJudiciaryLaw EnforcementLaw PracticeLegal ServicesLegislative OfficeLeisure, Travel & TourismLibrariesLogistics and Supply ChainLuxury Goods & JewelryMachineryManagement ConsultingMaritimeMarketing and AdvertisingMarket ResearchMechanical or Industrial EngineeringMedia ProductionMedical DevicesMedical PracticeMental Health CareMilitaryMining & MetalsMotion Pictures and FilmMuseums and InstitutionsMusicNanotechnologyNewspapersNonprofit Organization ManagementOil & EnergyOnline MediaOutsourcing/OffshoringPackage/Freight DeliveryPackaging and ContainersPaper & Forest ProductsPerforming ArtsPharmaceuticalsPhilanthropyPhotographyPlasticsPolitical OrganizationPrimary/Secondary EducationPrintingProfessional Training & CoachingProgram DevelopmentPublic PolicyPublic Relations and CommunicationsPublic SafetyPublishingRailroad ManufactureRanchingReal EstateRecreational Facilities and ServicesReligious InstitutionsRenewables & EnvironmentResearchRestaurantsRetailSecurity and InvestigationsSemiconductorsShipbuildingSporting GoodsSportsStaffing and RecruitingSupermarketsTelecommunicationsTextilesThink TanksTobaccoTranslation and LocalizationTransportation/Trucking/RailroadUtilitiesVenture Capital & Private EquityVeterinaryWarehousingWholesaleWine and SpiritsWirelessWriting and EditingBusiness Insider SelectMoney Game Select10 Things Before the Opening BellMoney Game Chart Of The DayMonday Scouting ReportMoreFeaturedBusiness Insider SelectTechnologySAI SelectMobile InsightsScience SelectAdvertising SelectAdvertising: The BriefSocial Media InsightsFinanceFinancial Advisor InsightsClusterstock SelectMoney Game SelectYour Money SelectSmart InvestorMonday Scouting ReportWealth Advisor SelectLifestyleThe Wire SelectThe Life SelectSports Page SelectGetting There SelectManagementRetail SelectBreaking NewsWar Room SelectEnterprise SelectCareers SelectInstant MBAMarketing MondaysPolitics and MilitaryPolitics SelectMilitary SelectLaw & Order SelectTop 10 Things & ListsLists Select10 Things In Tech You Need To Know10 Things Before the Opening BellClosing BellCharts of the DaySAI Chart Of The DayMoney Game Chart Of The DaySports Page Chart Of The DayYour Money NASDAQ Composite 3,444 +10.27 (+0.299%) S&P 500 1,615 +1.33 (+0.082%) NYSE Composite 9,135 +0 (+0%) LinkedIn Login Hot: LinkedIn In your network

HUGE: White House Delaying Key Obamacare Provision For A Year

Why Local-Mobile Marketing Is Exploding

RANKED: The 30 Most Creative People In Social Media Marketing

Login with LinkedIn to see what your friends are reading on Business Insider.
Login with LinkedIn

No articles have recently been shared in your network.

More »

Welcome, !You are logged into FacebookSocial: Your Activity|These articles have been shared on your timeline. You can remove them here:OptionsNotify me when a story is shared.YesNo Welcome, ! You are logged in with Google Social: Your Activity| These articles have been added to your Google activity log. You can remove them here: Options Notify me when a story is shared. Yes No #Americabacon flag usa

How To Make An American Flag Out Of BaconSummer Can Be Crazy Fun In The CityHow Do You Stack Up To These Celebrity Golfers?TrendingThe Future Of MobileKim Kardashian Mario Lopez phone

Life After Instagram: Opportunities In The Mobile Photo-Sharing EcosystemWhy Local-Mobile Marketing Is ExplodingInside The Rise Of Responsive Design And Its Pros And Cons As A Mobile StrategyHow Location-Based Services Are Transforming The Mobile IndustryAdvertisementIn partnership with BetterJobsFind A JobTech JobsMedia JobsFinance JobsC-Level JobsDesign JobsSales JobsSee All JobsThanks to our partnersCatchpoint - Web Performance MonitoringOoyala * Copyright © 2013 Business Insider, Inc. All rights reserved. Registration on or use of this site constitutes acceptance of our Terms of Service and Privacy Policy. Disclaimer Commerce Policy Powered by MongoDB Stock quotes by YCharts Ad Serving by 24/7 Open AdStream Made in NYC

View the original article here

0 comments:

Post a Comment