Mohamed El-Erian, Allianz SE’s chief economic adviser, said the rally in stocks and high-yield bonds is part of a “liquidity trade,” based on optimism that central bank stimulus efforts and the accumulation of corporate profits will sustain market gains.

“That is what you’re betting on,” El-Erian said Friday in an interview on Bloomberg Television. “You’re not betting on the Trump rally anymore. You’re not betting on the reflation trade anymore.”

U.S. stocks surged in the months after Donald Trump won the presidential election in November, on speculation that tax reform and infrastructure spending would stoke economic growth. Equities extended gains even as progress stalled on those priorities, and are trading near record levels.

El-Erian said monetary policy, corporations and an increasingly wealthy economic elite “means more money to invest back in the market,” bolstering prices. He was asked if there’s reason for investors to limit risk, if they believe market sentiment is being driven more by views about liquidity.

“I think yes,” answered El-Erian, who is also a Bloomberg View columnist. “It’s also a reason to change the way you’re taking risk,” and focus more on areas such as emerging markets.

U.S. payrolls rose less than expected in May, according to data released Friday. And even though the unemployment rate fell, that was partly the result of people opting not to seek work. The participation rate, or share of working-age people in the labor force, decreased to 62.7 percent from 62.9 percent a month earlier.

‘Bad News’

“People are not rejoining the labor market, they’re still exiting the labor market,” El-Erian said. “And that is bad news in terms of overall growth potential.”

Some of the challenges are difficult to manage, such as an aging population and a wave of technological innovation that displaced blue-collar workers. Still, the U.S. can invest more in training workers, he said. And El-Erian also reiterated his calls for reforming the U.S. tax code and modernizing infrastructure, both of which he said are antiquated.

“We have inflicted these wounds upon ourselves by lagging on the policy response,” he said.