Mohamed A. El-Erian , Columnist

Markets Are Getting Used to Shocks But Mask Risks

The reaction to the coronavirus follows a pattern that obscures long-term challenges.

January 27, 2020 at 9:01 PM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

Markets know the drill.
Photographer: Kevin Frayer/Getty Images

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The market reaction on Monday to anxiety about the spread of the coronavirus fell largely in line with textbook expectations, and did so in an orderly fashion. However, it did little to reconcile longer-term uncertainties that in the last few years have been repeatedly eclipsed by strong technicals that have delivered one of the longest and best rallies for both risk-on and risk-off investments.

The market reaction was driven by risk-off sentiment and a flight to safety that resulted in: