On Thursday, Mohamed El-Erian remarked briefly on CNBC that the QE trade was not dead, but rather evolving. We were interested in hearing more. Here is what Mohamed came back with.

Given that the Federal Reserve terminated Wednesday its large/scale asset purchase program, it's tempting to also call an end to QE’s influence on trading strategies. That would be a mistake. Rather than become an irrelevant input, the QE influence is evolving.

The prior QE trade was essentially a bet on the length and effectiveness of the Fed’s repression of volatility across markets and, therefore, its ability to boost asset prices in excess of what would be strictly warranted by fundamentals. It worked extremely well, and virtually for all asset classes as the Fed’s experimental policies also altered traditional correlations.

By announcing Wednesday that its getting out of the QE business, and doing so before the “lift off” of the real economy, the Fed is now shifting its policy emphasis fully to forward policy guidance. And while our central bankers re-iterated that interest rate would be low for a “considerable time,” this is likely to be a less potent approach to repressing volatility.

Yet this doesn’t mean that QE should no longer be an input into the formulation of trading strategies. Rather, its influence is changing both is scale and scope, starting with the international dimension.

The Fed’s QE exit contrasts to what will likely happen in Europe and Japan in the next few weeks. There, central bankers are likely to do more QE rather than less. As such, and after an October respite, we should expect the now more differentiated QE regimes to impart greater volatility to the foreign exchange markets in the context of general dollar strengthening. For technical reasons discussed earlier (including here), such volatility would also likely spill over to other markets.

The evolution of the QE influence also means that, when it comes to favorable fundamentals. America’s lead over the rest of the world (and over Europe in particular) would need to increase even more if it is to maintain its equity market out-performance. And in all this, investors in risk markets would be getting even more dependent on a durable growth lift off here, fewer headwinds from abroad, and robust macro-prudential policies to minimize the risks of a market accident.