In an exclusive interview last week, I asked PIMCO CEO Mohamed El-Erian a simple question: After overdosing on optimism last decade, are we now overcome by too much pessimism?

His answer: Yes.

Just look at corporate balance sheets. Apple (NASDAQ:AAPL) has more than $100 billion in cash and cash equivalents earning a yield below the rate of inflation. Microsoft (NASDAQ:MSFT) is also tripping over cash, as are most global large-cap companies. Investing and expansion are down as everyone waits to see what happens next.

And when businesses don't expand, consumers don't earn. When consumers don't earn, they don't spend. When they don't spend, everything slows. It's a vicious cycle that can be hard to break.

Here's what else El-Erian said about the pessimism cycle.

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