Market Insight by Nicolas Roth & Marco Bonaviri - 2018: wall of worries or not?


The year is not over yet, but unless a serious shock, 2017 will be remembered as a year of superlatives by investors.  All US equity indices printed all-time highs more than once during the year while credit spreads tightened to rock-bottom levels and volatility traded at an all-time low. Other notable moves include bitcoin   soaring more than 700%, the market cap of the so-called FANG and their Chinese counterpart (Baidu, Baba and Tencent) grew $1.5trn, more than the entire German market cap, and Argentina, who defaulted 8 times in 200 years, was able to issue a 100-year bond… Bouts of stress were not sufficient to shift this über-bull mindset: the North Korea crisis appears, in hindsight, a complete non-event, while the constitutional crisis in Spain had virtually no impact outside of some Spanish names. Is this market really trading at unrealistic levels and what could derail (or not) this seemingly unstoppable market?


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