Mohamed El-Erian explains the big risks investors face


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El-Erian on trade war: US will be less damaged than others

The markets are not swinging wildly in response to escalations within the commerce warfare — however there’s nonetheless numerous threat in shares, Allianz Chief Financial Adviser Mohamed El-Erian says.

On Tuesday night, the Trump administration introduced that it’s making ready one other spherical of tariffs on Chinese language items value $200 billion. On Wednesday, the Dow slumped simply 170 factors — lower than 1%.

That is as a result of Wall Road is betting that the tariffs are simply a part of a broader technique, defined Mohamed El-Erian.

The market is behaving as if the “tit-for-tat tariff course of will not be an finish in itself,” El-Erian instructed CNNMoney editor-at-large Richard Quest on “Markets Now” on Wednesday. “It is a means to negotiations.”

Allianz’s chief financial adviser warned that the administration’s aggressive method is not simply gained.

“There is a threat of a coverage mistake. There is a threat of an accident,” he stated. “And that threat goes up each time we’ve an escalation.”

Associated: Trump readies new tariffs on China

Finally, El-Erian believes the US may gain advantage.

“The US will probably be much less broken than different international locations in a full-blown commerce warfare,” he stated. It could even be higher off than earlier than the commerce battle, he stated.

“Is that sufficient to get different international locations to focus and negotiate?” El-Erian requested. “Whether it is, the US could find yourself really in a greater place.”

El-Erian stated that firms reporting earnings could report a rise in manufacturing prices due to tariffs. However we’re unlikely to listen to that the commerce actions have lowered demand, he stated.

The investing professional added that Trump’s abrasive method to disruption is akin to disruption within the tech business.

“What we’re seeing is somebody who goes out of their solution to shake up the institution.”

Associated: Watch ‘Markets Now’ right here each Wednesday at 12:45 p.m. ET

CNNMoney’s “Markets Now” streams dwell from the New York Inventory Trade each Wednesday at 12:45 p.m. ET. Hosted by Quest, the 15-minute program options incisive commentary from consultants.

Latest friends embody BlackRock’s R (BLK)ick Rieder, Stifel Chief Economist Lindsey Piegza and bitcoin bull Mike Novogratz.

You may watch “Markets Now” at out of your desk or in your cellphone or pill. If you cannot catch the present dwell, try highlights on-line and thru the Markets Now e-newsletter, delivered to your inbox each afternoon.

CNNMoney (New York) First printed July 11, 2018: 2:11 PM ET

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