\u201cCockroaches are unpleasant, they come in groups, but they don’t eat away at the integrity of the system. Termites eat away at the integrity of the foundation,\u201d El-Erian said in the interview.<\/p>\n
Excessive Risk-Taking<\/p>\n
He added that the reason for the existence of cockroaches in the U.S. economy is that investors have stretched to extract additional returns.<\/p>\n
\u201cSome people went beyond their comfort zone and beyond their ability to do due diligence. So I don’t think we should be surprised that we will have these accidents, these credit accidents,\u201d he said.<\/p>\n
El-Erian noted that while there may be some \u201ceconomic accidents,\u201d he does not think there will be an economic shock.<\/p>\n
What Keeps Him Up At Night<\/p>\n
However, he added that the significant pressure on the lower ends of the income distribution for households is keeping him up at night. He said that the amount of debt that will have to be refinanced at higher interest rates is another issue troubling him.<\/p>\n
\u201cThose two things are potential areas of pressure, which would be made worse if we get a policy mistake,\u201d he added.<\/p>\n
Meanwhile, U.S. equities declined in Thursday\u2019s pre-market trade. At the time of writing, the\u00a0SPDR S&P 500 ETF<\/a> (SPY), which tracks the S&P 500 index, was down by 0.34%, the\u00a0Invesco QQQ Trust ETF<\/a> (QQQ) declined 0.45%, while the\u00a0SPDR Dow Jones Industrial Average ETF Trust<\/a> (DIA) fell 0.22%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the \u2018extremely bullish\u2019 territory.<\/p>\n Also See:\u00a0Apple Strikes WeChat Deal With Tencent, Will Earn 15% From Purchases In Mini Games, Apps: Report<\/a><\/p>\n For updates and corrections, email newsroom[at]stocktwits[dot]com.<\/p>\n
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