El-Erian: Stocks May Go the Way of Commodities, Bond Yields

"A big surprise is the extent to which record equity prices have diverged from declining commodity prices and unusually low yields on government bonds," Mohamed El-Erian, chief economic adviser to Allianz and a Moneynews insider, writes in the Financial Times.

And that divergence may not last, he says.

While the S&P 500 has returned 13.2 percent so far this year, the Bloomberg Commodity Index has dropped 8.7 percent, and the 10-year Treasury yield has dipped to 2.24 percent from 3.04 percent last Dec. 31.

The Federal Reserve's massive easing program has allowed stocks to rise even though the economic recovery has been subpar, El-Erian says.

But "at some stage in 2015, market correlations will probably revert to a pattern that is warranted by economic and policy fundamentals," he writes. "What that proves to be is an open question."

If global growth doesn't accelerate substantially next year and economic policy doesn't improve, "equity investors will regret not paying greater attention to the messages coming from their counterparts in the bond and commodity markets," El-Erian says.

Meanwhile, Jeremy Grantham, chief investment strategist of money management firm GMO, says the 5 ½-year-old bull market for stocks has a bit further to go, but then it's going to collapse.

"I am still a believer that the Fed will engineer a fully-fledged bubble (S&P 500 over 2,250) before a very serious decline," he writes in his latest quarterly commentary. 

The S&P 500 closed Monday at 2,053.44.

• The Good, Bad and Ugly of Lower Oil Prices
• El-Erian: 'When You Have Very Sharp Moves in Currency, Something Breaks'