(New York)

Emerging markets have had a rough year, with a bear market taking hold. An “all clear” or false bottom has been called a number of times, which means investors need to be very wary of piling in. That said, an interesting signal is showing that emerging markets may be in for a turnaround. London-based Ashmore plc is a major asset manager focused on emerging markets, managing $76 bn in the asset class. Their shares are a bellwether for where EM assets may be headed. And lately, Ashmore has been doing very well. The shares are still down for the year, but rose for eight straight days through Wednesday, their longest winning streak since February.

FINSUM: This could be a sign that the tide is turning. As further evidence, the gains seen in Ashmore shares were not experienced by other asset managers, showing there is a clear differentiation.

(London)

Pretty much since the day it happened, the prospect of a second Brexit referendum has loomed large. Now, almost 2.5 years since the initial vote, it is becoming closer to reality. PM May’s universally panned Brexit deal with the EU is adding weight to efforts to hold another vote. A conservative MP (same party as Theresa May) has proposed a new vote in May, saying it would only take 22 weeks to prepare. The vote would have three options—stay in the EU, accept the May plan, or leave without a deal.

FINSUM: Critics of a second referendum argue that it is undemocratic to not abide the first vote. However, the action of leaving the EU is unprecedented, and the deal that Britain could get from the EU was completely unknown, so in our view, holding second referendum to decide on the actual terms is actually the most democratic option.

(New York)

One of the pillars of this nearly decade-long bull market has been the growing profits of US corporations. US stocks have seen their profit margins rise steadily since 2009 and are around a record mark of 10%. Analysts continue to forecast growth to around 12% in 2020. At the beginning of the 1990s, margins were just half of now. However, this narrative is fraught as just 10 stocks account for around 50% of all the margin growth in the S&P 500 since 2009. Those stocks? All tech, unsurprisingly. But what it means is that many other companies are not as healthy as many assumed, and as we enter a tougher era for margins, including higher labor costs, increased input costs, and higher interest costs, there could be some steep falls.

FINSUM: We think this is a reason to worry, as when margins really start to fall on the back of higher rates and costs, investors are going to be very alarmed.

(New York)

The DOL’s fiduciary rule may be gone for now, but it is a long way from dead. The rule will be taking a new form in 2019, and even now, its spirit lives on in the form of a number of state-based fiduciary rules. One such is in New Jersey. However, Wall Street is putting up a massive fight to block the rule. Financial Advisor Magazine puts it this way, calling it a Battle Royale and saying it is “pitting the nation’s largest Wall Street and broker-dealer associations against comparatively tiny fiduciary advisor and financial planning associations”.

FINSUM: We think if NJ passed a comprehensive fiduciary rule, it would probably give momentum to not only the DOL, but a number of other states which are working towards this or are on the fence about it.

(New York)

REITs are an interesting sector at the moment. The real estate sector is obviously past peak, and rates are rising, a double whammy for REITs. The initial reaction for many would be “stay away”, however, there is some value to be had. One interesting area is in regional mall REITs, which have actually outperformed the S&P 500 this year. There is a lot of variation in quality between different regional malls, however. In particular, the performance is bifurcating between the very best malls and the rest, with the former thriving, and the rest lagging.

FINSUM: The US has 1,000 malls and some estimates say there is only enough demand to solidly support around 300. The ones that stick around, particularly the top 20, will likely do very well.