El-Erian thinks that Larry Summers withdrawing from the race for Fed Chairman is very good for the stock market, as Summers was viewed as likely being "hawkish."
He thinks that the Fed will taper in a small amount starting this week. He also believes that the tapering will occur in Treasuries and not in the mortgage market.
To minimize the impact of the taper, El-Erian expects that the Fed will "strengthen" its forward guidance.
Watch the video below to see where El-Erian thinks interest rates will go and when: