Mohamed A. El-Erian: This Market Selloff May Be Different

Those, like me, who worry about an excessive decoupling of stock prices from fundamentals also feel that the dominating impact of liquidity may be changing and potentially waning. This is particularly the case for central banks, whose market intervention is evolving because of a change in what former Fed Chairman Ben Bernanke described as a “benefit, cost and risk” equation.

Without a significant improvement in fundamentals, investors would be well-advised to remember that there is an impending limit to how much liquidity injections can protect markets from the underlying economic reality.

Mohamed A. El-Erian, Bloomberg 12 September 2016