China, Europe pose biggest risk to US equity investors: Mohamed El-Erian
The U.S. economy is on “very strong footing” thanks to a strong labor market and pro-growth policies, but Allianz Chief Economic Adviser Mohamed El-Erian is worried that external factors could create headwinds for U.S. equities.
“Europe is slowing, China is slowing and we’ve got to navigate through a more difficult neighborhood,” El-Erian told FOX Business’ Maria Bartiromo on Monday. “Remember you can be a good house, but you’ve also got to worry about the neighborhood.”
Because of this and in addition to central banks raising interest rates or allowing them to rise, U.S. markets have moved up and down, he said. But from an investment standpoint, the U.S. is still the best game in town.
“There’s still some separation between valuation and fundamentals but the good news is fundamentals are slowly validating where asset prices are,” he said. “And that is a difference from where we have been in the past where there has been an enormous gap.”
El-Erian added that investors shouldn’t exaggerate the volatility.
“Investors should realize that if they are in a more volatile phase that they shouldn’t overreact,” he said. “They should continue focusing on strong balance sheets, strong cash flow, [and] agile business models,” he explained.