There will be no more shooting fish in a barrel for investors seeking to profit from the quantitative easing (QE) in vogue for central banks around the world, says Mohamed El-Erian, chief economic advisor at Allianz.
"We should respect the QE trade," he told CNBC
. "I don't think it's the QE trade of the old type, which is the generalized compression in all the risk spreads and risk premiums. That's gone, so I think it's much more a relative trade."
While the Federal Reserve ended its third round of QE last year, the Bank of Japan intensified its QE, and last week the European Central Bank announced that it will be buying 60 billion euros ($65 billion) of securities a month.
"The main issue facing a lot of investors today" is whether to chase the rallies in financial markets sparked by Europe's QE, El-Erian stated. Instead, he suggested investors "focus on specific stories in the equity market."
El-Erian reiterated his view that the Fed will raise interest rates in June or July, influenced by a strengthening economy and Fed officials' desire to push rates away from zero.
"They would move for two reasons. First, the economy's improving, the labor market is healing and there's a good genuine debate as to how close are we to the natural rate of unemployment," he explained. "The second is they're uncomfortable being at zero but now they have reasons to move. They're worried about what they're doing to resource allocations and they're worried that the marketplace is taking this as normal."
The central bank has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
Newsmax Finance insider Sean Hyman
doesn't expect a move until September or October, he told Newsmax TV
"I don't think that rate hikes are something to be feared at this point, because even if they start hiking, and even if they put in a couple of hikes this year, it'll probably be 25 basis points," the editor of Ultimate Wealth Report newsletter, told Newsmax TV's "MidPoint" show.
"So if you get 0.5 percent, is that going to kill companies in America? It's not. The earlier hikes never hurt companies. It's those later hikes, so I don't think we have anything to fear for quite some time on the rate front."
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