(New York)

One of the biggest surprises in the rise of ETFs has been the dominance of stocks over bonds. Bonds have always had some liquidity challenges for individual investors, so at the outset one would have expected bond ETFs to do well since they greatly enhanced accessibility to the asset class. However, while stock ETFs have exploded, bond ETFs have been more of a steady progression, but things are heating up. Bonds represent 15% of the total ETF market, but are growing quickly, with the market size doubling to $1.5 tn by 2022.

FINSUM: We think bond ETF demand will rise in line with rates. Once people start seeing 5% yields plus on solid bonds with short durations we think there will be more and more buying.

(Washington)

In what is being seen as similar to Nixon’s China moment, President Trump has agreed to a meeting with North Korean leader Kim Jong Un. The meeting will take place within the next few months and the location has not been determined. It is very unusual for two top leaders to meet without a series of lower officials meeting first, but the White House says the approach is suitable in this situation because Un in the only one qualified to make decisions in the very authoritarian regime.

FINSUM: This is a sign of progress after 60 years of conflict, but it also raises the stakes for both sides.

(Chicago)

McDonalds’ stock has not been doing so well lately, but guess what, that has not diminished its prospects. Well, at least not in the eyes of Wall Street stock analysts. McDonalds had a great 2017, but has fallen 12% this year. The introduction of its new $1-$2-$3 menu is part of the reason. However, most analysts still rate it a buy and it looks like a good long-term value proposition. The stock currently trades for 20x earnings, versus a high of almost 25 last year.

FINSUM: We think CEO Steve Easterbook is a great leader for the company and we have high long-term conviction for old Mickey Ds.

(New York)

Okay investors, hold on to your hats. A big name has just come down with a stern and gloomy warning for the markets. JP Morgan is saying that stocks may have a giant bear market. How big? Try a 40% correction, according to the bank’s co-president. Daniel Pinto, the bank’s co-president who oversees trading and investment banking, says that markets are bound for a big correction because of fears over rising interest rates and inflation. The bank thinks the market will see a two- to three-year downturn where prices will fall up to 40%.

FINSUM: This is a big correction that JP Morgan is calling for. We do think the market might go through a rough patch, but we don’t know if it is going to reach these kind of Financial Crisis era proportions.

(New York)

The market had a big sell-off this week when it was announced that top Trump economic adviser, and former Goldman Sachs executive Gary Cohn was leaving the White House. The departure elevated worries about a trade war and left investors feeling that there was no moderating voice left in Trump’s inner circle. However, the Wall Street Journal reminds investors not to be overly worried as this “Teflon” market seems to always shake off fears and heads higher.

FINSUM: The WSJ’s argument is not very strong, but trade war does seem like an issue where fear greatly outpaces reality.