Mohamed El-Erian, chief economic adviser of Allianz and former chief executive of Pimco, told CNBC's "Fast Money" on Monday that three beliefs are "deeply ingrained" in the markets today:
- Politics may be noisy, but that doesn't contaminate economics.
- Central banks are here for us. They can repress volatility, and they are willing and able.
- Economic growth may not be exciting, but it is predictable and stable.
"This is why what we hear out of Washington doesn't disturb investors," El-Erian said. "That's why what we hear out of Trump doesn't surprise the markets."
It will take "major policy mistakes and major political developments" to spook investors, El-Erian said. "I would have thought it should have happened already."
El-Erian is referring to the run-up in stocks of late, despite a "lack of content" in President Donald Trump's speeches.
To top it off, the market is increasingly expecting the Fed to raise rates in March. The CME FedWatch tool pegs the probability of a rate hike this month at 86.4 percent. El-Erian said he believes there will be "at least three hikes" this year.
So it seems, Wall Street is thus far pleased with Trump's tone and is thinking, "We can wait on the content," El-Erian told CNBC.
Apparently "[Wall Street] needs major things to happen" to shake investors out of those three above-mentioned beliefs, El-Erian said.
"It seems to be a patient market, and that has surprised me," he said.