(Los Angeles)

PIMCO says there is one really big thing to fear in markets above all else—the lack of fear. The current “melt up” is symptomatic of extreme investor confidence, and that is cause for grave concern, says PIMCO, one of the world’s largest money managers. According to PIMCO, “The fact that the fear is gone is the main reason why we should be worried”, continuing “That means most investors are now pretty fully invested and that means they will want to get out if the markets start to correct -- exacerbating the downdraft”.

FINSUM: We think PIMCO has a great point. The market’s start to this year is pretty insane—it is on track to triple in value in 2018. Is this the final run before a big downturn?

(New York)

There has been A LOT of talk lately about a bond bear market. The idea is that rates are now in a secular rising cycle led by a hawkish Fed and rising inflation. The issue with that view is two-fold. Firstly, the bond market “experts” calling for the bear market are well-served if it comes true because of the strategies they use. And secondly, there isn’t really evidence of much inflation and the Fed is not looking overly hawkish. The one really worrying thing is that the economy has been performing well, which does lend itself to rising rates and more money flowing into risk assets.

FINSUM: We think all these worries are premature. We have a new Fed chief coming in which now one is sure about, and there just isn’t much inflation. Plus, there are tens of millions of people retiring who will need income investments.

(New York)

The market will inevitably be shocked by some big news this year. Trying to forecast such news always seems like a futile exercise, but Barron’s has gone out on a limb and tried to select what will rock markets in 2018. There a three big calls being made. The first is a US government shutdown on the back of political in-fighting. That might cause a dip, but not a lasting one. The other two could be different. For instance, a looming trade war with China or other major trading partners could cause serious market issues. Additionally, there may be indictments of Trump’s closest family members, including Donald Trump Jr. and Jared Kushner, according to Barron’s.

FINSUM: Indictments of Trump’s family would rock Washington and the national psyche to its core. But it is hard to say that it would have a lasting effect on markets other than to create political uncertainty.

(San Francisco)

In what appears to be the first big American reinvestment on the back of the new US tax package, Apple has announced that it will invest $30 bn in the US and pay its $38 bn tax bill. It will expand US operations and add 20,000 new jobs. The company will also give all of its more than 120,000 employees a $2,500 stock bonus. President Trump commented on the news that “I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States”.

FINSUM: This is why we thought the lowering of corporate taxes was a good idea, and we are very happy to hear that Apple will pay its bill and invest more in the US. As an aside, we do sort of feel like Apple is using this investment as PR fodder to combat against the battery/performance scandal.

(New York)

A few weeks ago bitcoin was trading at over $20,000 on some exchanges. No it is trading below $9,500. Critics of the cryptocurrency are taking the big fall as vindication of their view, while others are sticking to bitcoin. Other cryptocurrencies slid big too, with ethereum and litecoin both falling around 30%. “The crypto craze is morphing into a crypto crash, from Bitcoin mania to Bitcoin bust”, says a trading analyst, continuing that “that there is no level at which value players step in” when a bubble is bursting.

FINSUM: One of the big problems with bitcoin, as opposed to say the cotton bubbles of American history, is that there is no fundamental underlying economic value of the currency, so there is no potential bottom other than zero.