(New York)

One of the really worrying parts of this year’s stock market is that buybacks are booming to new records, yet share prices remain flat. US companies are on pace to buy back $800 bn of stock this year, a figure which would even eclipse 2007’s bonanza. But worryingly, 57% of the more than 350 component companies that have bought shares back this year are trailing the S&P 500’s return. That is the highest share to fall short of the index since the 2008 Crisis.

FINSUM: Aside from the worries about share prices not responding, the other concerning factor is that companies are buying their shares back at very high prices, which seems like it might portend the end of the bull market.

(New York)

Everyone knows it has not been a good year for bonds, especially Treasuries and long-dated bonds. However, did you know that it is July and the bond market is on pace for its worst annual performance in a century? (yes you read that correctly). Global bonds are on pace for an annualized loss of 3.5%. So the question is how can one keep money in the market, but not get hammered. The answer is high-grade, short-term bond funds. Floating rate corporate loans and high-yield municipals seem like good areas of focus. Remember that shorter duration bonds are less susceptible to interest rate risk, which makes them safer as the Fed raises rates.

FINSUM: These picks seem spot on to us. Higher-yielding, shorter duration, and floating rates all appear to be good selections for the current environment.

(New York)

It may have become such a part of your daily routine that you don’t notice it, but new technologies have completely transformed the RIA business. “The revolution in fintech has allowed advisors to now do in minutes what it used to take them all day to do”, says Wealth Management. With all the portfolio management software, robos, and beyond, technology has changed the nature of the business more towards client engagement and offering insights and opinions. One small RIA says new technology means they can grow AUM 10x but only make two new hires.

FINSUM: Technology does seem to have changed the nature of the business by taking out much of the mechanical work. We haven’t seen anybody that is upset with the change.

(Houston)

Investors in oil need to be aware—the market is increasingly looking like a price surge is in store. Supply constraints are currently looming over the market, which has pushed prices to a 3.5 year high. Now, some are calling for a spike that would take oil to $150 or, almost double the level of now. The call comes from renowned research house Sanford Bernstein. The logic is that the oil price tumble over the last few years has caused “chronic underinvestment” in supply which will power the next “supercycle”. According to Bernstein, “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008”.

FINSUM: The view here seems sound. However, we must saw\y that there is one overarching logic that bothers us about this call—that the world has bountiful oil that has becoming ever cheaper to extract. That makes us think supply constraints could be overcome more quickly.

(Washington)

In a cruel twist of fate, guess who the biggest losers are when a country imposes tariffs on imports? Its own exporters. The reason why seems to be two-fold. Firstly, the tariffs on imports take cash away from foreign countries to buy exports. Secondly, such tariffs often lead to retaliations, which then shrink the size of exports (e.g. what is happening to Harley Davidson right now). The link has been well understood by economists for almost a century, but new research shows it concretely in trade flows. Overall, the trade balance does tend to improve, but exporters suffer significantly.

FINSUM: The problem is that trade wars are almost a zero sum game. That said, the US has a better bargaining position than usual in this one.