Allianz’s chief economic advisor, Mohamed El-Erian, said Monday the selloff will continue until one of two things happen: emerging markets put in place a policy circuit breaker or prices fall low enough to bring buyers back.
“Low enough means a lot lower than here because they’ve been inflated well beyond fundamentals by central bank policies, so in order to bring people back in you’ve got to overshoot the fundamentals on the down side to induce people back in,” he told CNBC’s “Squawk Box.”
“We are still well above what would be warranted by fundamentals. There has been this enormous faith in central banks, and that faith in central banks means we have borrowed returns and growth from the future, hoping that central banks will be able to hand off to higher growth. That has not happened.”