El-Erian On Why US Is Best Place To Invest And The Collapse In German Yields

With different economies of world facing significant turmoil, US has turned out to be the best place to invest according to leading economists and analysts.

Mohamed El-Erian, Allianz chief economic advisor, was recently on CNBC to opine on German Yields and what makes US the best investment destination currently.

“The German collapse in yields and the flattening of curve there and […] of Germany is now 47 basis points is really a reflection of the weak economy in the Euro zone, concern about the Greek exit from the Euro zone and of course the likelihood that the ECB will do more. What we have discovered is that you can’t push the spread between German Bunds and US Treasury as well above 150. 150 basis points and then that stops moving up,” El-Erian said.

He continued, “So, we then have our tenure that’s governed by International development and that’s what happening right now. So, keep an eye on the Euro zone because the Euro zone is going to influence various prices and the currencies are being asked to carry the bulk of the burden and in the past that has tended to break something in the system.”

Is US Still The Best Place To Invest?

“I think, the US has so many advantages. Its better economically right now, we have done much more in terms of healing the financial system, we are less exposed to geo-political shocks from Russia and the Middle East and we have got the entrepreneurship that has been so key, but valuations have moved a lot. So, on a standalone basis the US absolutely dominates, but markets have priced that in already,” El-Erian replied.