(Istanbul)

The big selloff in bonds has caused a wipeout in emerging markets. The sector, which has seen broad turmoil this year, just witnessed its biggest selloff since March. That fact is quite eye-opening given that the period includes all the worries over Turkey. The big losses have largely been driven by the appreciating Dollar, which hurts EM economies and assets. With the US economy going so well and the Fed likely to increase the pace of hikes, EMs look vulnerable. The MSCI EM Index fell 2% today.

FINSUM: There are some idiosyncratic problems, but EM economies don’t look as weak as this year’s market performance would suggest. It is really US strength that is hurting EM assets.

(New York)

Have you heard of the new “doom loop”? The term may seem vaguely familiar, and follows in a long line of sensationalist financial terms. Just like in its origin during the European debt crisis, the term once again refers to a European state sinking under the crushing weight of its own debt. You guessed it, Italy. The doom loop refers to the European bank habit of loading up on sovereign bonds, and in turn creating a negative reinforcment cycle where bonds fall in value, which leads to serious concerns over a bank meltdown, which then exacerbate the original economic fears. That is exactly what is now occurring after Italian bonds sold off steeply following the country’s wild budget approval.

FINSUM: Italy is one of the very largest debt markets and economies in the world, and a full scale meltdown there would surely impact global markets, even the Teflon-coated US stock market.

(New York)

Rates are rising, and with it, investors need to take a closer look at their portfolios. Rising rates can have serious effects on some dividend-focused sectors, such as utilities, REITs, or consumer discretionary, and most bonds. With that in mind, here is an ETF to help combat rising rates. One fixed income ETF built for the current rate environment is the iShares Interest Rate Hedged Corp Bd ETF (LQDH). What makes this ETF special versus others is that it is actively managed and has longer-term fixed income exposures, which stands in sharp contrast to the mostly short-term bonds these funds typically hold. It holds a 3.62% yield and charges 0.24% per year.

FINSUM: That seems a good expense ratio and yield given that this is an actively managed fund. Interest rate hedged ETFs seem like a good idea right now given the strong economy and increasingly hawkish Fed.

(New York)

It has just been announced that New York state is opening a tax probe into the Trump family. The scope of the investigation will be extensive, digging into the president’s inheritance form decades ago. The investigation was prompted by an extensive article published by the New York Times which alleges fraud in Trump’s tax affairs. The NY state department of taxation said it was “vigorously pursuing all appropriate avenues of investigation”. The New York times alleges that Trump undertook “dubious tax schemes during the 1990s, including instances of outright fraud”.

FINSUM: Here comes another potential legal headache for Trump.

(Washington)

Interesting news out of the media-shy Mueller investigation today. Two prosecutors on Mueller’s team are leaving or have already left the probe. The departures come following the prosecution of Paul Manafort. The news comes after an announcement in August that two other prosecutors had already left the probe. The newest departures mean there are 13 members remaining on Mueller’s team. James Comey comments that the investigation may be in its “fourth quarter” following the Manafort plea.

FINSUM: It looks like the Mueller investigation is either winding down or falling apart. Either way it seems likely it may finally conclude.