Mohamed El-Erian chief economic advisor at Allianz said Wednesday that the market’s sell-off was now entering a new phase. Investors lost stocks for bonds and fled to safety. He said that “Today is a new stage as opposed to just continuing what we have seen” on Wednesday’s CNBC “Closing Bell”. This was initially a selloff due to interest rate fear and financial conditions tightening. It now has the potential to be a growth fear, he stated. Stocks fell on Wednesday after retail earnings reports warned that rising costs could cause problems. More than 1,100 points were lost by the Dow Jones Industrial Average, which suffered its largest decline since 2020. The S & P 500 and the Nasdaq Composite fell by more than 4% each. Investors bought safe-haven bond on Wednesday. Just look at the bond markets. El-Erian explained that bond prices have risen, which is in contrast to the earlier sell-off. “This just indicates that it’s the beginning of a new phase.” Former chief executive of PIMCO said that the sell-off might provide trading opportunities in the short term, however. There will be trading opportunities but the market is still very fragile. The major economies are experiencing slower growth. … It’s a different global macro environment and inflation is going to remain a problem for a while,” El-Erian said. He suggested that investors keep their cash and cash-equivalent assets safe from inflation. El-Erian stated that while it is still losing money, the cash equivalent assets are a safe place for investors to hide until the growth storm passes.
