(New York)

Retirement takes a lot of planning, which every financial advisor knows intimately. Yet, retirees themselves often forget some of the big things that can derail their financial plans. Accordingly, here is a list of several important high expense items that retirees forget to account for. Firstly, one-time big ticket things, like new furnaces, air conditioning units, repainting the house etc. This big expenses can catch retirees off-guard. Relatives in need are often another big commitment that retirees don’t see coming. Additionally, many don’t realize that as their Social Security distributions rise, they can be moved into a higher tax bracket and may also see their Medicare premiums rise.

FINSUM: This is a just a good reminder piece of some of the pitfalls of retirement.

(Washington)

Speaking as a financial publication, the SEC’s new Reg BI has been an odd story to cover. For something so consequential to the industry, there has been quite scant coverage of it, and very little industry commentary from actual advisors and networks. Unlike the DOL rule, there has not been the ceaseless cacophony of voices chiming in for and against the rule. But why? The answer is that the SEC has much sharper teeth than the DOL. Unlike the DOL, which has a very narrow scope of regulation in wealth management, the SEC is the principal regulator of the industry, and thus nobody wants to get on its bad side with aggressive commentary about the rule. Accordingly, everyone has been quite tight-lipped, even in interview requests.

FINSUM: This makes a lot of sense. If one wants to get really critical of the SEC’s new rule, they better have very deep pockets for lawyers, as the SEC can basically put any firm out of business.

(New York)

There is serious trouble brewing in the riskiest corners of the debt market. The lowest rated group of corporate bonds have seen their yields rise for months as a host of factors are causing losses. Whether it be the switch to ecommerce, poor energy prices and renewables, or prescription drug regulations, companies across multiple sectors have been getting hammered. The problem is that the issues hurting these CCC rated companies are not just isolated to them, the move in sentiment and selling is spreading to the broader high yield and speculative loan market. More companies are being downgraded too, and default rates are picking up.

FINSUM: Rather than a panic, this is a broad-based and fundamental move away from risky debt. It may not lead to huge losses—yet—but expect spreads to keep rising.

(New York)

Investors have been playing defense in stocks for months. Everyone has been very spooked by economic data and the trade war, which has caused a rotation into defensive sectors. However, a top manager at Fidelity, Denise Chisholm, is saying the opposite: it is time to play offense. Her core argument is that real interest rates in the US are negative--which happened after the Crisis and also in the 1970s and 1980s—which is highly bullish for the stock market. Further, the ECB and Fed are cutting at the same time, a quite rare occurrence, and one that has always led to an equity market rally.

FINSUM: This is an interesting contrarian argument. We particularly like the ECB + Fed narrative.

(New York)

Warren and Sanders’ tax plans have been scaring those on the right for several months, especially as Warren has risen to become the dominant candidate for the Democratic bid. But how much of a negative effect might her plans have on the market? The answer is probably not much, and if anything, it will be bullish for risk assets. Firstly, Warren’s plan will only touch the top 75,000 households in the country, so it is a niche focus. But secondly, because of the taxes imposed, ultra high net-worth families will need to be more aggressive in their asset allocation in order to continue to grow their wealth, meaning they will likely put more capital into risk-on investments.

FINSUM: This was quite a useful insight. It is hard to imagine Warren’s wealth tax being good for the market, but the logic of this argument (from Barron’s) seems sound.