(Washington)

President Trump seems to have emerged from the summit with North Korea with a very high degree of confidence that the situation there has been handled. Trump put in writing yesterday that “there is no longer a nuclear threat of North Korea”. Interestingly, North Korean state media also reported the meeting as a major success, but did not mention denuclearization at all. Trump did backtrack a bit, saying “I may be wrong. I mean, I may stand before you in six months and say ‘Hey, I was wrong’. I don’t know that I’ll ever admit that, but I’ll find some kind of an excuse”.

FINSUM: We think this summit was a success and that Kim has played the whole situation very sharply. Our only concern is the lack of detail about how North Korea will actually go about denuclearizing.

(New York)

The whole retail world is centered on Amazon right now. Will ecommerce, led by Amazon, continue to disrupt traditional retailers? That is the nauseatingly frequent question being fretted over by investors. Well, here are a group of Amazon-proof strategies that investors can use to pick retail stocks. The core of the argument is that retailers need to focus on the areas that Amazon is not good at offering. In particular: “experience; customer service; partnerships with influencers; and personalization”. Private label brands are another area, as companies like Target have launched in-house brands that are exclusive to their stores.

FINSUM: We believe in three of the areas mentioned, but in-house brands and customer service are not good strategies to outcompete Amazon in our mind. In-house brands just aren’t compelling enough (especially nascent ones), and we feel Amazon has better customer service (at least online) than almost anyone.

(Houston)

Oil is an enticing commodity right now. Global cooperation on constraining output has led to strongly rising prices, which coupled with margin improvements during the downturn, means the sector looks ripe for great profits. But where is the best place to put money? Barron’s has tapped a top fund manager for his picks, and they are interesting. Both picks are exploration and production companies, and are Kosmos Energy and Apache. The former is a South American E&P that focuses on offshore drilling, while Apache is Houston-based and focuses more on gas.

FINSUM: These are pretty contrarian bets on small E&P companies. These seem quite high risk/high reward.

(New York)

Advisors (or advisers) look out, your titles are poised to be taken away by the SEC. While much of the focus on the new SEC best interest rule has understandably been centered around its pseudo-fiduciary components, there is actually a major fight brewing over the SEC’s new rules which restrict the use of certain titles. In particular, it wants to bar brokers from using the word “advisor” and potentially “financial planner” as well. The idea is to only associate the word “advisor” with a fiduciary to make it clearer to consumers. Industry interest groups are already railing against the proposal.

FINSUM: We find this a complicated issue. We understand the fiduciary motivation here, but advisors have been using that title for a long time and, for better or worse, are known that way by the public. Further, a fee structure does not, in our view, change whether someone is an advisor (in the general sense of the word).

(Washington)

All eyes on the Fed. Not only is the winding down of the Fed’s balance sheet a potentially major issue to Dollar liquidity and emerging markets, but the market has rate worries to deal with. The big question is how low the US jobless rate can go before it sparks big inflation. Currently sitting at 3.8%, the Fed needs to decide how long it can tolerate the hot market before hiking rates quickly. The US jobless rate has only twice been so low. Once in the 1960s, which led to a decade of high inflation, and once in 2000, which was followed by a recession.

FINSUM: There is currently a big disconnect between the rate rises the market is pricing in versus what the Fed is forecasting. The market may lose that gamble very badly.