(Washington)

Don’t be fooled by the relative calm and quiet surrounding the fiduciary rule space. While the SEC’s BI Rule is being assessed, fiduciary rules are continuing to pop up at the state level all over the country. Nevada and Maryland are now pushing forward state fiduciary rules. They argue that in the absence of a federal rue, it is states’ job to step in and protect residents. The pair of states join many others doing the same, including New Jersey and New York.

FINSUM: You don’t see Nevada and Maryland put on the same list for almost anything! But that is a testament to how widespread this state-based push for fiduciary rules is.

(San Francisco)

Big tech companies got hit badly in last quarter’s selloff. On top of that broad volatility, Facebook has been going through its own particular troubles, most specifically related to the potential impact of its data leaks. However, all the bearishness may be in the past, and right now could be an excellent time to buy the stock, at least according to Jefferies. “FB’s status as leader in Social is unchanged and we see continued upside for FB shares as it digests the social hangover … FB remains a tier 1 platform for advertising spend with Instagram showing positive drivers of growth”, says the bank’s research team. The big growth driver is Instagram, whose revenue is growing at an estimated 60% annually. “We believe over the course of ’19, shares will slowly re-rate as rev growth & margin outlook become clearer”, says Jefferies.

FINSUM: We would tend to agree with this assessment. Despite all the concerns over data privacy, Facebook still has a very solid underlying business that is growing strongly.

(New York)

If one thing is really clear in the economy, it is that the housing sector’s momentum is clearly negative. Home sales slumped badly in November and then worse in December. Further, home buying traffic plunged too. This is not necessarily a surprise when you consider how much mortgage rates have risen, but contrasted with how well the labor market is doing, it is quite eye-opening.

FINSUM: We are going to come in with a contrarian viewpoint here. Consider these stats, all reported by Barron’s: “The median home value in December was $223,900, up 7.6% over the past year, according to real-estate listing service Zillow. That is up from about $150,000 in late 2011. Properties are sitting on the market an average of 78 days, down from 114 days in 2016. The mortgage delinquency rate is a low 1.1%, and just 8.2% of houses had negative equity—well below levels of a few years ago. The foreclosure rate has plunged to 1.2%, down from 6.3% in 2009”. That shows a very different picture!

(Detroit)

Ford reported earnings this week, and they speak not only to its own weakness, but to the headwinds facing the US car industry. Full year 2018 earnings declined considerably from the previous year on weak North American sales, as well as a poor performance in Europe and China. Ford’s CEO continues to promise that plans for a major restructuring will be released soon, but as yet, investors have been given little more than promises for change.

FINSUM: Ford is hurting worse than GM, but both companies are facing product lineups that are mismatched to current customer demand, which means the next couple of years are going to be challenging.

(New York)

If you have been paying attention to the mortgage market, you will see that some of the most worrying lending activities from the pre-Crisis era are returning. For instance, there has been a sharp recent rise in loans to non-traditional borrowers, or those who have trouble proving their income. The amount of such loans looks to have almost quadrupled in 2018 versus the year before. So far these loans look to be healthy, but there are concerns that in a downturn such mortgages could deteriorate quickly.

FINSUM: These loans are subject to more stringent regulatory standards than back before the Crisis, but this is certainly something to keep an eye on.