(Washington)

Trump’s legal team put out a bold proclamation today. In a 171-page briefing that preceded the launch of his impeachment trial in the Senate, Trump’s lawyers argue that he cannot be removed from office for abusing power. They contend that since he did not break any laws, he cannot be removed from office. The team summarized their view, “House Democrats’ novel theory of ‘abuse of power’ improperly supplants the standard of ‘high crimes and misdemeanours’ with a made-up theory that would permanently weaken the presidency by effectively permitting impeachments based merely on policy disagreements”.

FINSUM: This is a very interesting argument as the legal team seems to have changed tactics. Rather than arguing the underlying facts in the case, they are now trying to say that even if all the facts are true, Trump still cannot be removed from office.

(New York)

The golden age of streaming is over, that is for sure. For the last several years, the combination of Netflix and Amazon Prime have given consumers a wide array of choices at low prices. However, the streaming space is now fragmenting dramatically as Disney and others take their programming off Netflix and others, making consumers pay for more subscriptions to get the same content. NBC, for instance, just launched its own service, Peacock, for its content. However, it did something quite differently—a lot of the content is free for consumers. You only pay for a premium section of the content, but a bulk of its is free when you sign up. If you are already a Comcast subscriber, the whole thing is free, though it does have limited ads.

FINSUM: This is the first time that a major streaming service decided to be free (outside of Prime Video being free for Prime subscribers). This may change the whole pricing paradigm for the industry.

(New York)

No matter how many times you tell them that renting a vacation home is a better financial idea, many clients get the “I want to buy a vacation home bug” and can’t get it out of their system. When that happens, here is a few things of which to remind them. Firstly, their vacation home will not have the same capital gains tax exemption as their primary residence. Additionally, costs associated with the property, including insurance, property taxes, and possibly fees associated with renting the property, can all rise faster than their incomes, especially if they are on a fixed income in retirement. Vacation homes can also be complicated from an inheritance perspective, as some heirs may want to keep the property while others may want to sell it.

FINSUM: All good arguments. Hopefully some clients will listen!

(New York)

Financial advisors often wonder about the best way to get client money into private equity. The industry has long had very high hurdles for investing directly in funds, and publicly traded funds that try to replicate private equity returns are still nascent. However, there is another good way to get PE like returns by proxy—buy publicly traded private equity company stocks. KKR is a very well known firm that is currently trading very cheaply and seems like a good buy. The stock rose 50% last year but badly trailed its rivals in a year that saw many PE companies double in value as they shifted from partnerships to corporations.

FINSUM: The market seems to be underpricing KKR’s ability to create management fees based on its dry powder, which is causing the weaker valuation.

(New York)

It may not get much attention right now, but the biggest threat to stock prices is also the same thing that has been supporting them for years. If you really consider what has driven the extraordinary rise in stocks, it is the fact that bond yields have been so outrageously low since the Crisis. This has created the widely-covered “TINA” (there is no alternative) syndrome that has driven investors to pour capital into stocks. Accordingly, many analysts say the biggest risk to stocks is a pickup in inflation, which would likely send bond yields sharply higher.

FINSUM: This is a solid argument theoretically, but calling a rise in inflation has been a very poor bet for over a decade. Why is that different now?