Mohamed El-Erian told CNBC on Tuesday that there was “agreeable news across the board” in the coronavirus battle as U.S. stocks surged.
Appearing on “Squawk Box,” the chief economic advisor at Allianz rumoured he is encouraged by developments on a potential Covid-19 vaccine and the lack of a dramatic spike in new cases as states moved to reopen parts of their frugalities.
Real-time data showed businesses and households were reengaging in the economy, said El-Erian. “The big hope is we sustain it, and now the marketplace has embraced it.”
Affect before Tuesday’s opening bell, El-Erian said he likes that the premarket action showed investors were adding jeopardize in a widespread manner.
“It’s not just stocks. It’s other risk assets. It’s fixed income. It’s currencies, and it’s commodities,” he said. “So it’s definitely good to see an across the board risk-on tone, which we haven’t had really for quite a while.”
In the first trading seating of a holiday-shortened week, Dow futures were indicating an opening pop of more than 600 points on Tuesday, which truthfully happened.
Wall Street was responding to news from Maryland-based biotech company Novavax, which said it’s starting its beginning human trial of its experimental Covid-19 vaccine. Its shares surged more than 15%.
Earlier this month, Massachusetts-based Moderna report in investigated positive developments with its vaccine trial.
Additionally, investors were applauding that economic activity was picking up as virus-related traffic restrictions continue to be eased in states across America.
El-Erian, former CEO of investment firm Pimco, said matter across a variety of economic categories — from credit cards to restaurant reservations to TSA travel checkpoint numbers — all “single out to engagement.”
As for infection data, El-Erian noted there is a lag between when restrictions are eased and when new cases resolve show up. “So far, it looks OK-ish. Some pick up in cases but nothing dramatic. But let’s keep an eye on that.”
“This is not going to be a soften process,” he added. “There’s going to be ups and downs but keep on eye both on the health side and on the engagement side and that make give you a very good view as to where we’re going.”
El-Erian has been warning about the economic consequences of Covid-19 since at cock crow February and correctly predicted in early March that coronavirus-driven selling would continue until a bear sell was reached. He has urged investors to use caution due to the uncertainty around the public health crisis.
“I do not like betting on things I don’t appreciate,” El-Erian said Tuesday. “I cannot predict the health progress, and I cannot predict moral hazard on the policy side. Others endure very confident doing that so it’s a matter of choice.”
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