3 Things Driving The Market: Trump Policies, Higher Inflation And International Investing

Famed economist Mohamed El-Erian was a guest on CNBC's "Squawk Box" Thursday and offered his take on what is fueling the stock market's current rally.

According to El-Erian, there are three reasons why the market is moving higher.

Trump's Policies

First is President-elect Donald Trump's proposed economic policies - not just corporate tax reform but pledges to boost infrastructure spending and deregulation of businesses, which is expected to generate higher growth and earnings.

Higher Inflation

Second is expectations for higher inflation, which will restore pricing power to the corporate sector.

International Investing

Third, the U.S. is seeing an influx of money from international investors and some of that cash will be put into the stock market.

"I think we have established a good foundation in terms of hope for better fundamentals," El-Erian said. "If we go from hope to design and implementation then this is a market that can go further. But I just caution the U.S. can not operate in isolation from other countries and this stock market is going to need help from Germany, China and Japan in terms of their policies."

Finally, El-Erian suggested that Trump's appointments of individuals to lead the country's economic and trade policies is so far "encouraging" and "understand the functioning of the economy."