Economist Mohamed El-Erian told CNBC Wednesday afternoon that the market is changing from a liquidity-driven market to a fundamental-driven market.
"That's good news over the long term," he said, "but we'll inevitably have lots of turbulence in the short term."
El-Erian expects the U.S. to grow at 3% for 2018 and 2019, higher than the rate expected by the International Monetary Fund as the U.S. economy gains and the world slows down. Bond yields should also shift higher, he said, due to economic policy and the exit of non-commercial buyers of long-dated bonds.
While he sees many potential risks, El-Erian said he believed the U.S. has three primary growth drivers to carry it through 2018 and 2019: fiscal spending, householding spending and business investments.Â
U.S. markets were in sell-off mode Wednesday, with the S&P 500 down 3.17% and the Dow off 3.15%.
Moving from liquidity-driven market to fundamentally-driven market: El-Erian from CNBC.
