Mohamed A. El-Erian , Columnist

How to Think About the Market Sell-Off

The Fed’s liquidity injections no longer underpin asset prices, leaving a greater role for fundamentals.

October 10, 2018 at 11:52 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.”

Back to basics.
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The 3 percent to 4 percent plunge in the major American indexes on Wednesday is unsettling for investors who have grown accustomed to low U.S. market volatility in recent years. What’s more disturbing is that most of the traditional hedges against such a large equity sell-off, both within and across market segments, did not work well.

Yet neither of these developments should come as a great surprise given the following five factors that also point to what’s ahead: