- Economist Mohamed El-Erian says markets may falter as the Fed’s liquidity “engine” becomes less and less powerful, and as investors begin to challenge elevated valuations.
- “If that engine disappears, we have a long way between where asset prices are right now and where fundamentals will validate them,” he told Bloomberg TV.
- In a separate op-ed for Bloomberg, El-Erian said economic and corporate fundamentals must improve for valuations to be sustained.
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Renowned economist Mohamed El-Erian says the stock market faces downside risk as the Fed’s liquidity “engine” becomes less and less powerful. He also sees the possibility of a dip if more investors start to question whether sky-high valuations can be validated by fundamentals.
“Where we go from here is going to continue to be liquidity driven, if that engine disappears, we have a long way between