Mohamed El-Erian: Current Risk Aversion Will Lead To 'Interesting Investment Opportunities In Future'

After losing 0.8 percent on Wednesday, the S&P 500 again opened lower on Thursday and continued to trade down by more than 1 percent. Mohamed El-Erian, Allianz chief economic adviser, was on CNBC recently to discuss his outlook for the U.S. and global markets and how it is going to create interesting opportunities in the future.

Shockwaves From Emerging Markets

"It happens in emerging markets," El-Erian began. "We are seeing currency pegs fall, we are seeing emerging market currencies weaken.

"That starts sending shockwaves to other markets and at the end is the equity market in the U.S. So, what we are seeing is a classic overshoot. It starts first in the emerging market world, and then it starts spreading and what that causes is heightened risk aversion."

Related Link: A Different Approach To Low Emerging Markets Vaulations

The Opportunities

El-Erian was asked for examples of opportunities that will get created. He replied, "For example, in [the] emerging market world everything is being treated the same. Everything is being treated as if it is exactly the same country in the same place. That's not the case. So, good names are being hit as well as bad names.

"There's going to be opportunities there, relative to begin with and in a few trading sessions and weeks it will be an absolute trade. Similarly, as it spreads around the world; corporate bonds versus equities, another interesting opportunity. So, you are going to see lots of opportunities as this dislocation spreads," El-Erian concluded.