(London)

While it has largely faded from the American consciousness, the fallout over 2016’s Brexit vote has been nothing short of an absolute mess. The negotiations for departure have finally made a little progress, but are plagued by internecine warfare at every level. Now, a push for a second referendum, which could refute the first, is gaining traction. Former PM Tony Blair is urging his liberal party to back a second vote. Blair and Liberals believe that leaving the EU is not the solution that will fix the worries of Leave voters.

FINSUM: We think this situation only has upside for investors. If the UK reversed its positon, it would lead to a rally in the Euro and Pound and be bullish for most asset classes.

(New York)

Barron’s has put out a headline article by one of their most favored columnists, the well-known Byron Wien, which argues that stocks are in for a 10% correction this year. The argument is that the economy is going to keep doing well, which will lead to speculative buying getting out of hand. This, coupled with higher interest rates, will then cause a pullback of ten percent on the S&P 500 to around 2,300, but the market will rally strongly later, bringing it back to 3,000 for the end of the year.

FINSUM: This is a fairly complex call given the fall-then-rally argument. We overall don’t like this view, as we think if the market falls significantly, it might remain that way for several months.

(New York)

Anyone on the lookout for signs of a correction might want to pay attention to this. New data shows that US investors are avoiding US stock funds. Of the $4.1 bn poured into mutual funds and ETFs in the week ending December 27th, around 70% of the money flowed overseas. The trend is nothing new though, as US stock funds saw their third straight year of net outflows despite the market rising strongly. Taxable bond funds and international stock funds have seen 56 straight weeks of inflows.

FINSUM: We don’t think this is a warning sign of anything other than good times to come. US investors tend to put more money overseas when they are bullish, so this is not a negative sign.

(New York)

The fiduciary rule is in an odd sort of limbo. Despite being seemingly dead from a rule-making point-of-view, it is still very much alive as a practical rule that needs to be abided by even if it is not in full force. But is still surprising to learn, especially given all the hype over the rule’s possible dissolution, that 42% of all advisor-held US assets under management are now subject to the fiduciary rule. That figure is up from what would have been 24% in 2005 and 33% in 2010. The growth has come from the large number of firms seeking to grow their fee-based managed account programs.

FINSUM: That is a quite a high proportion of assets. We hope the DOL rule will not be implemented and the SEC will come up with a more effectual version.

(New York)

The Broker Protocol just suffered another loss. Despite Merrill Lynch deciding to stay in the agreement, the loss of Morgan Stanley and UBS appeared too much of an enticement, and Citigroup has now departed. Citigroup has about 1,000 advisors across the country, and the bank says that leaving the Protocol will allow them to “continue to invest in our growing team of award-winning financial advisers”.

FINSUM: So MS, UBS, and Citigroup are now gone, with ML and Raymond James saying they will stay in. One side is eventually going to win. We think the leavers will eventually cause MS and RJ to leave.