El-Erian Discusses 'Zombie Market' On Bloomberg TV

"If the "Walking Dead" TV series needs any extras, perhaps it can turn to Wall Street, where one exec said the Federal Reserve might soon be overseeing a "zombie market."  

El Erian Uncomfortable 'Betting On Bailouts' 

Investors recently digested a series of very concerning economic readouts, including initial jobless claims, PMI data, among others, Bloomberg's Jonathan Ferro said on "Bloomberg The Open."

But on the other hand, multiple encouraging catalysts for the market are being introduced, such as a massive stimulus program backed by the Federal Reserve, which is screaming "we will catch you if you fall."

The opposing forces aren't enough to make Allianz chief economic advisor Mohamed El-Erian "comfortable betting on moral hazard," he said on Bloomberg. 

"I don't feel comfortable betting on bailouts and I certainly don't feel comfortable with this notion the Fed is going to come in and buy stocks regardless of the risk it takes," El-Erian said.

El-Erian On A 'Zombie Market' 

The Fed's move to buy stocks could result in a shift away from talking about "zombie companies" toward a "zombie market," he said.

The Fed's new role implies it can no longer allocate capital efficiently, he said. 

What's Next

The ability to navigate through the current "bumpy journey" and take advantage of the post-crisis landscape are "really important" factors, the Allianz exec said. 

But looking across the world, the ability for companies to be resilient and agile varies, El-Erian said. 

"That's why I continue to say do not fade the U.S. relative to Europe and emerging markets," he said. "The U.S. will continue to outperform in relative terms.

The U.S. dollar will also remain a strong currency moving forward, he said. 

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