Mohamed El-Erian says that while the latest jobs report isn’t perfect, it is “wow”-worthy — and that could actually mean US stocks will lag European equities in the short term.

“Although it isn’t blemish-free, the ‘wow’ jobs report released this morning confirms that the U.S. labor market is continuing an impressive, if not historic, favorable run,” El-Erian wrote for Bloomberg. “Even though wage growth remains too weak, the broad-based employment gains will translate into wider domestic momentum for the economy to expand. And it is only a question of time until wages respond, too. Meanwhile, the data will also induce the Federal Reserve to start raising rates by its September policy meeting at the latest, albeit in a gradual fashion. And there are notable market implications, particularly for the dollar.”

El-Erian said the labor market is showing an “encouragingly broad-based pattern in which most sectors are participating in a dynamic labor market”. That doesn’t mean he thinks US stocks are offering the best potential right now, though. “In highlighting once again the divergent outlooks of the U.S. and the euro zone when it comes to both economic performance and monetary policy, the report will contribute to further dollar appreciation, an even wider gap between U.S. and German interest rates, and the short-term outperformance of European equities compared with U.S. ones,” he says.