There is a lot of talk this morning -- and rightly so -- on the big drop in Apple's share price. After all, it is a widely owned and followed stock; it is one of the most recognized brands in the world; and it accounts for a meaningful portion (9.5 percent) of the NASDAQ composite.
Most of the commentary focuses on the reasons and validity of the recent movements in Apple's share price. The basic question is the extent to which the sharp fall -- down over 10 percent early this morning and 35 percent overall since the end of September -- is warranted by growing concerns about the ability of the company to maintain rapid growth in the context of increasing competition and an uncertain product cycle.
This question is well covered by analysts, and will continue to be so.
What is less well analyzed -- and quite consequential -- is the extent to which the rest of markets as a whole have decoupled from Apple.
Apple's sharp fall since September has been accompanied by an across the board rise in major indices -- from 1 percent for the NASDAQ to 4 percent for the Dow Jones Industrial and 5 percent for the S&P 500.
We can think of three possible reasons for this large and largely unexpected divergence:
With its mystique and ability to deliver what Guy Kawaski called "enchantment," Apple lives in its own microcosm. As such, it is natural for its share price to behave very differently from other companies -- and especially so when macro policy and political factors are playing such a large role.
Alternatively, Apple's loss is someone else's gain. Accordingly, the decoupling is an indication of a healthy market rotation, underpinned by solid consumer demand and dynamic product innovation for the industry as a whole.
Finally, it could also be that investors are subject to sequential reactions, as opposed to simultaneous ones. Here, Apple's fall could potentially affect other stocks adversely through two channels: the weak and temporary one, where investors sell other stocks in order to buy Apple at a lower price; or the more durable and meaningful one involving a generalized increase in risk aversion.
Interestingly, I suspect that the dynamic determining the dominance of one or more of these three factors will come from outside -- namely, central banks' willingness and ability to continue to artificially support financial markets (not as an end in itself but, rather, as a means to attain their macroeconomic objectives): The greater central banks' effectiveness in raising asset prices and delivering economic outcomes, the more likely that markets as a whole will escape negative contagion from Apple.
All this speaks to a reality that is hard to escape: as every day passes, even more depends on the success of the current phase of unusually active, and highly experimental, central bank policies.
Cross-posted from CNBC.com.
Mohamed El-Erian is the CEO and Co-CIO of Pimco, which oversees nearly $1.8 trillion in assets and runs the Pimco Total Return Fund, the largest bond fund in the world. His book, "When Markets Collide, " was a New York Times and Wall Street Journal bestseller, won the Financial Times/Goldman Sachs 2008 Business Book of the Year, and was named a book of the year by The Economist and one of the best business books of all time by the Independent (U.K.).