The 1 Equation Investors Need to Know to Understand the World Today

From TheAtlantic.com

And why it says investors should walk away from risk.
MOHAMED A. EL-ERIAN MAY 22 2013

4 Global Transitions/4 Global Experiments = 1 Unusual Market

Confused about the markets? Don't be. All you need is the above equation to understand the recent past, the present and what may lie ahead. Let me explain.

Five years after the financial crisis, the global economy is attempting four major, multi-year transitions. Each is consequential; and, together, they speak to historical re-alignments.

1. The first transition is from assisted growth to genuine and more inclusive growth, especially in the West;
2. Second, from central banks purchasing financial stability to economies developing more lasting structural stability;
3. Third, from tired China-US relations and a financially-fragmented Eurozone to new regional and global economic arrangements which re-align incentives or, at the very minimum, reduce current tensions; and
4. Fourth, from increasing social inequality and political dysfunction to institutional, political and social renewal.

Each of these transitions is complex and uncertain. Put them together -- as is the case today -- and the result is, to use Chairman Ben Bernanke's insightful formulation, "an unusually uncertain outlook."

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