Dow nears 20,000: ‘We’ve gotten here for good reasons,’ Mohamed El-Erian says
As the Dow Jones industrial average came within a fraction of 20,000 on Friday, noted investor Mohamed El-Erian told CNBC, “We’ve gotten here for good reasons.”
Those reasons include the pro-growth policy announcements from President-elect Donald Trump and a better political setup that may result in the Republican-led Congress acting on those proposals, the chief economic advisor at Allianz said in an interview with “Closing Bell.”
Also important is the fact that “the rest of the world hasn’t gotten in our way.”
Stocks have been rallying since Trump’s victory. On Friday, the Dow came within 0.37 point of 20,000 in midday trading but ultimately ended about 65 points higher at 19,963.80.
El-Erian believes the market is sending an important signal to politicians.
“If you deliver pro-growth policies, good things are going to happen. And hopefully that message will be heard not just on Capitol Hill but also in Europe and in Japan” he said.
As for whether the markets will continue to move even higher, El-Erian said that will depend on a couple of factors.
“We need announcements to become design and implementation and somehow we have to cope with the divergence between the good things that are happening in the U.S. and the less-good things that are happening, which means we’ve got to be careful about the dollar.”
The U.S. dollar has also been rallying since Trump’s win in November.