(New York)

Since the end of the Broker Protocol, it seems that many firms have shied away from recruiting. Especially at the senior level, but even at the junior level, firms have not been investing as much in recruiting. But that may be starting to change, as recent reports of increased recruiting activity have emerged, such as word today that Edward Jones is ramping it up. Edward Jones says it aims to hire 250 senior advisors from other firms this year. Additionally, there is some news out that Morgan Stanley and Merrill Lynch may be working on a so-called Broker Protocol 2.0.

FINSUM: This seems an encouraging sign on the recruiting front after a rough year. FYI Edward Jones is not part of the Broker Protocol.

(New York)

Bloomberg has reported that prosecutors from the Southern District of New York have effectively declared war on the president. In the last week it became clear that Michael Cohen had accepted a guilty plea and given testimony incriminating Trump and that prosecutors had offered immunity to Trump’s CFO Weisselberg. In the words on Bloomberg, “Once the Southern District gets its jaws onto a string of crimes, it doesn’t let go”. Weisselberg will likely be required to give information on all criminal activity he knows about, which could pose problems for Trump both personally and in terms of the presidency.

FINSUM: It seems like there is a veritable army of prosecutors and investigators going after Trump right now. It may all not amount to much, but we would expect more turbulence and fireworks.

(New York)

We don’t want to say that investors are sleepwalking into it, but in many ways it seems an apt metaphor. Whether stock investors like it or not, the US trade war with China is continuing apace. The two countries’ negotiations on the issue last week went nowhere, and the US is about to hit Beijing with $200bn more in tariffs. Their response will hurt the US economy, as many of them will be on consumer goods, which could raise prices and lower demand. Industrial stocks are likely to be hit by Beijing’s retaliations. 50% of all Chinese imports will soon be subject to new tariffs.

FINSUM: We are starting to wonder if tariffs might lead to “stagflation” in the near term. In consumer demand ebbs at the same time as prices rise for goods, it seems like a perfect recipe for stagnation and inflation.

(Rome)

Investors in stocks will be familiar with the market’s habit of focusing on an issue for a week or two, getting anxious, and then moving on almost completely once things looks even half-resolved. That is exactly what happened with Italy’s debt crisis a few months ago. However, this problem looks likely to rear its ugly head again. Italy is the third largest debt market in the world, and its looks dangerously close to imploding. That may be why Trump offered Italy funding to help its situation. The big fear is a near-term budget vote where the country’s parties are considering a package that would offer a flat tax rate and universal income for the left, all while ballooning the deficit to 7% of GDP, way above the EU limit of 3%.

FINSUM: Italy is currently led by a pair of parties that hate the Euro, so it seems likely that they may tempt fate with this kind of package. However, there is a potential compromise in the works.

(New York)

If there was ever a mantra for mutual funds, it should be this: boring and cheap is beautiful. A new study by Morningstar has found that when it comes to the funds, investors are best off buying ones with very cheap fees, and not just for the obvious reasons. Morningstar dug deeper to understand the relationship between costs and performance gaps, or the spread between the return of the fund itself versus the fund’s average investor. What it found is that in low price funds, this gap was much smaller. While some of that might be accounted for by simply saying those who buy cheaper funds are smarter investors, the reality is that investors are more patient on returns when they hold cheaper funds. There is less incentive to sell, and therefore they hold the funds longer, leading to better returns.

FINSUM: This makes perfect sense to us. If you have an expensive fund that is losing money, you are going to want to dump it quickly. But if a fund is ultra-cheap, you are more inclined to give it some time.