(New York)

Equity investors may be understandably frustrated and anxious at the moment. The rebound after February’s lows has not held up and stocks are right around their bottom for the year. Well, if history is any guide, the pain will likely last 200 days. That is the average length that a correction has lasted during this bull market, and this is the sixth of its kind since 2009. The longest was 417 days between 2015 to 2016. The market is already 60 days into the correction, so if the forecast holds, it would emerge in August.

FINSUM: This would only provide comfort if one thinks the current correction is merely that, and not a full blown bear market.

(New York)

No, the headline above is not a joke, though it may look like one to some. While it is easy to joke about people leaving millions to their dogs, the reality is that setting aside a portion of inheritance to take care of a pet is increasingly common, and advisors need to be aware. 44% of pet owners have some financial plan in their will for the care of pets, with the structure usually being that money would go to a designated caregiver. One advisor in Boca Raton who handles pet planning says “If you care about them and you want to make sure they’re taken care of, you have to have a contingency plan for them or else they end up at the Humane Society”.

FINSUM: 44% is a huge number, but it does make a lot of sense. Pets are valued family members and it seems irresponsible to many to leave them without care.

(New York)

Morgan Stanley has been making some interesting investments with its own account, with four stocks standing out. The bank increased its equity holdings in these companies enough to trigger regulatory filings. The four stocks are Greenlight Capital, Shake Shack, Overstock.com, and CGG. Greenlight Capital, David Einhorn’s fund, has not been this cheap since 2009 because of poor performance. Shake Shack is looking very healthy, and MS owns over 11%. Overstock skyrocketed in 2017 on blockchain hype, but has since lost a bunch this year; but MS’ seems to like the valuation, again increasing their holdings to over 11%.

FINSUM: What an interesting mix of stocks. It is also illuminating to see where banks are putting their own money.

(New York)

For anyone who thinks a trade war might not hurt the US economy, or that one may be easy to win, this is an important story. Robert Shiller, famed economist, just said a trade war with China would cause quick and devastating damage to the US economy. “It’s just chaos … The immediate thing will be an economic crisis because these enterprises are built on long-term planning, they’ve developed a skilled workforce and ways of doing things”. Shiller says that even if tariffs don’t directly affect the economy, many companies will lose their confidence to plan and invest. “It’s exactly those ‘wait and see’ attitudes that cause a recession”, says Shiller.

FINSUM: So we imagine that a trade war would be very disruptive and would undermine the confidence of US companies as it would destabilize the ground on which industry has been built for the last 25+ years. However, the US has put itself at the raw end of trade deals for many years and claiming some ground back may be positive in the long-term.

(New York)

One of the most popular fixed income assets for wealthy US investors are municipal bonds. Their tax exempt status has made them continually popular, but what will their fate be during a period of rising rates? There are currently fears that tax cuts and rising rates will wound the sector, but one top financial advisor says the muni sector “will retain its rightful position as a place where wealthy Americans protect their wealth”. Despite rising rates there will be lower issuance this year, which will protect the sector. Additionally, tax cuts for the wealthy will be modest, and not really enough to damage munis. “They will still be a relative value compared with other fixed-income, high-grade asset classes”.

FINSUM: We suspect munis will continue to have a high degree of demand, and if issuance stays low, then those are two important supportive factors. However, some municipalities are facing big budget and pension issues, which could pose a risk.