Pimco Says Lack of Fear in Markets Means You Should Be Worried
Lack of Fear in Markets could lead to Problems
By Adam Haigh
Updated on
Joachim Fels, Pimco managing director and global economic adviser, on why he thinks investors should be worried.
One of the world’s largest money managers says you should fear the lack of fear in markets.
Investors in global equities are enjoying the best start to a year in at least three decades, cutting back on cash positions and plowing more money into riskier assets. However, just as many expect this bull run to last even longer than previously expected, Pacific Investment Management Co. says now is the time for caution.
“The fact that the fear is gone is the main reason why we should be worried,” Joachim Fels, a global economic adviser at Pimco, told Bloomberg TV on Wednesday from Newport Beach, California. “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.”
Chances are that interest rates will rise faster than many expect, pushing up government bond yields, he said. Fels also suggested inflation may tick higher, and continues to advise an overweight position on inflation-linked bonds within fixed-income portfolios. His firm has cut exposure to corporate credit, particularly high-yielding bonds, concerned that a sell-off may soon arrive, with the asset class having a high correlation to stocks.
For now, investors seem immune to such warnings. The MSCI All-Country World Index is up 4.6 percent in 2018, the best start to a year since at least 1988, according to data compiled by Bloomberg.
“We’ve seen a big rally, markets are still going higher, but this is now a time for caution,” said Fels.
— With assistance by Scarlet Fu, and Julia Chatterley
By clicking the button, you agree to our Privacy Policy and T&C and authorize Priority Gold or someone acting on its behalf to contact you by email, text message, pre-recorded message, ringless voicemail, or automated telephone technology on a recorded line, for marketing purposes. Consent is not a condition of any purchase. Message and data rates may apply. You may revoke your express consent at any time by contacting us via (888-506-6439) or email at info@prioritygold.com
Thank You For Requesting Your FREE Gold & Silver Information Guide!
A Priority Gold Specialist will be in touch soon
to confirm where to send the materials.
By clicking the button, you agree to our Privacy Policy and T&C and authorize Priority Gold or someone acting on its behalf to contact you by email, text message, pre-recorded message, ringless voicemail, or automated telephone technology on a recorded line, for marketing purposes. Consent is not a condition of any purchase. Message and data rates may apply. You may revoke your express consent at any time by contacting us via (888-506-6439) or email at info@prioritygold.com
Request a Free Price Quote
Speak with our Expert Account Managers to discuss your requirements.
