(New York)

Many are currently having trouble choosing between growth and value stocks. On the one hand, growth stocks look outrageously expensive, yet have momentum on their side, while value stocks look like a great buy because of their discount compared to the market. However, there are a handful of stocks where you get the best of both. These stocks have both growth and value characteristics. Here are some of the diverse names to look at: General Motors, State Street, Marathon Petroleum, H&R Block, and Qualcomm.

FINSUM: If you can get good earnings growth and strong value in the same package, what is not to like?

(New York)

Yields have fallen precipitously of late. Ten-years have been touching around the 1.5% mark, and now another big threshold has been crossed—30-years have fallen below 2%. The latest moved downward was propelled by Apple’s announcement about coronavirus being likely to make it miss revenue estimates. The bigger question is about how investors should react. Bond prices are again enormously rich, and worse, there is little dependable yield.

FINSUM: This seems like a post-crisis repeat all over again. With yields so low, it feels like the market has returned to “TINA” (there is no alternative to stocks).

(San Francisco)

The market seems to be ignoring it, but Facebook is facing a major challenge to its business model. One so big in fact, that it is an esoteric threat to its whole way of making money (not to mention the rest of social media). That challenge is the collective ditching of third party cookies, which are little tools used to track users across sites. Third party cookies are used to assemble profiles of user behavior that then allow Facebook to deliver targeted ads. Since third party cookies are now being phased out by major browsers, Facebook (and other social media companies) are going to have a much tougher time assembling behavioral profiles, and this could ultimately have a cataclysmic effect on revenue and profitability. According to a research analyst, and explained by Barron’s, the big worry is that the decline of cookies—which is being called the “cookiepocalypse—will “will lead to ‘signal loss’ for advertisers, leading to reduced returns on advertising, and then an ‘implosion’ in ad spend by direct-to-consumer advertisers”.

FINSUM: As a publication, we understand this better than most. If Facebook ads are no longer as targeted, then their click-through rates will be worse. When that happens, advertisers will get worse overall results. This will mean they spend less dollars and pricing power will plummet. Facebook is definitely working on a work around, but until there is a concrete solution, this is a big threat.

(New York)

An adviser to the World Health Organization has put out a very worrying forecast. He thinks that coronavirus may end up infecting two-thirds of the globe. The forecast is based on studies of the virus’ transmissibility, which has been on display in China. The prognostication also comes after rising evidence mounts that Beijing is falsifying, or at least underrepresenting, the number of cases reported. Scientists have found very odd and near-impossible correlations within the data China is releasing on this virus.

FINSUM: We don’t think China is being fully honest about the extent of cases, which then amplifies the transmissibility of the virus.

(New York)

Ever since the announcement of the Schwab-TDA merger, RIAs have been nervous about their future with the combined custodian. TDA was known for working hard for smaller RIAs, whereas Schwab was not at all. Now, with the combined entity, RIAs are worried about being neglected, or dumped altogether. However, Schwab has just put out a public pledge, saying “When it comes to independent advisors, we’re all in … Today, over half of the firms we serve have under $100 million in AUM. You are the future of this industry”. Schwab also promised no AUM minimums or custody fees, saying they have “no intention to raise them. Because we believe that every firm of every size deserves world-class support”.

FINSUM: This was a more specific pledge, but it will likely do little to calm small RIAs.

(New York)

Coronavirus fears continue to stalk markets. Just when it seems like it might be getting better, more news comes out to hurt markets. With that in mind, there are three sectors investors need to avoid because they will likely not recover from coronavirus for quite some time. Travel and tourism stocks are the main ones to avoid. Large US airlines have canceled all flights to the Chinese mainland until March and so far the estimate is that 13 million flights have been canceled. Cruse ships and other stocks that cater to tourists (even luxury retailers) are also likely to stay hurt for some time. Consider that even when the immediate panic over the virus dissipates, attitudes may have change and travel may not immediately recover.

FINSUM: We think the idea of behaviors changing is quite a valid one. For instance, one of the big worries within the Chinese stock market is that people may not continue to eat at restaurants because of general fears about infection.

(Beijing)

Just when you thought the market’s worries over coronavirus might be in the rear view mirror, more bad news has just struck. The largest single day rise in cases just occurred, with China reporting an additional 15,000 cases in a single day. That rise was more than 10x the previous day’s increase. The country reacted by firing top health officials in the Hubei province, which is the epicenter of the outbreak.

FINSUM: When you combine this information with the growing chatter than China may be drastically under-reporting cases, it makes sense markets are worried. 60m people in China are currently under quarantine. Economic damage is inevitable.

(Washington)

Bernie Sanders’ 2020 bid for the presidency is starting to take on some very familiar patterns. In particular, his campaign is starting to look a lot like his rival Donald Trump’s campaign from 2016. Consider that Bernie is largely a party outsider who has widely been shunned by the Democratic mainstream. On paper his rivals seem more electable, but as they squabble with each other he has built grass roots momentum and taken some of the biggest early election events. Even as he rises, those in his own party worry about his actually winning the bid.

FINSUM: It is eerily familiar. Will it be a similar outcome?

(Washington)

Industry lawyers are checking every day, but nothing is happening. Everyone keeps looking at the DOL’s information portal to see if the agency has posted a new version of its Fiduciary Rule. Many thought the rule would be published by the end of the year, but so far nothing. The reason this is important is that the agency is running out of time to get the rule finalized and in place before the election. Rules that get approved immediately before elections are much more likely, and easier, for successors to undue. Therefore, if the rule does not get approved soon (which is near impossible because of the long approval process the White House has once the DOL proposes it), the rule is at risk of a victorious presidential candidate undoing it.

FINSUM: It seems likely this rule won’t get done until right before the election. If Bernie, or really any Democrat, wins it will likely be undone and the path will be paved for a much tougher rule.

(Washington)

Trump won his impeachment trial and his approval rating is higher than before it. But as we wind towards the election in November, an Achilles heel might be appearing for Trump. That weakness is that many of the states who supported him—indeed those that actually sealed his victory—are actually doing worse economically than they were when they elected him. In other words, the spoils of the current economy have not flowed into much of Trump country. This is especially true across the rust belt states of Ohio, Pennsylvania, Indiana, Wisconsin, Iowa, and Michigan. All of those states can turn Democratic in any presidential year (some are reliably Democratic)—swing states.

FINSUM: This could be Trump’s weakness in the election—that the blue collar boom he references might not have reached enough of the critical part of his base.