Bond guru Bill Gross believes investors should "be careful in 2018" and cites six areas they need to see as the calendar sets.
"Carry" refers to the price that investors pay to maintain assets in their balance sheets.
Professional investors should be aware of that cost and how it compares to any benchmark they are trying to overcome. When the carry equation no longer works, investors have to move on.
"The moment when the exit is obviously difficult and dangerous, but fundamental to survive in a new era, we may be reaching a tipping point so invest more cautiously," said Gross.
The question of "money"
Gross analyzes the difference between cash and credit. When too many investors turn to cash and credit equivalents, that can create a collapse of liquidity in the system.
"When the possibility of default increases and / or the actual yield of credit or liquidity diminishes and persuades the creditors to maintain the classic level" money "(cash, gold, bitcoin), then the financial system as we know it, it may be at risk (insurance companies, banks, mutual funds, etc.) as credit is reduced
and the "money" increases, creating liquidity problems, "he said
The Fed and inflation
The Federal Reserve and the Treasury always have an interconnected relationship, but particularly during the last decade as the central bank's government debt holdings increase.  Currently, the The Federal Reserve has about $ 2.5 trillion of Treasury bonds in its balance of $ 4.5 trillion, however, the Fed is allowing a maximum level of public debt to be executed each month, basically, what the Fed has been doing is allowing It is important that the government borrow money and pay a low level of interest on its debt.
"Money for nothing, the Treasury issues free debt, there is no need to pay the debt unless it creates inflation," Gross wrote. "For now, it's not, probably later."
CLOCK: Gross discussions about the dangers in the credit cycle .