(New York)

Well, the Dow might be about to suffer its longest losing streak in 40 years. The index has lost eight days in a row, and many of them were punishing. Now, if the Dow loses again today, making it nine days in row, it will be the longest streak since 1978. Since 1896, the Dow has only suffered ten losing streaks of nine days or more.

FINSUM: This seems like one of those stats that appears fairly meaningless when it is happening, but in hindsight might seem the start of a bear market/correction or recession.

(New York)

One of the big worries about the stock market right now is that the rise in bond yields could threaten appetites for equities. Well, the ultimate test of that theory has arrived. As of this week, the yield on the One Month Treasury note, yes the one month, is now just about equal to the S&P 500’s average yield. The One Month is yielding 1.84% versus 1.89% for the S&P 500. The notes have very little credit risk or interest rate risk. ETFs that invest in short-term debt have seen $17 bn of inflows this year.

FINSUM: So fund flows are starting to show why we are worried about stocks. Equity dividend funds have been seeing outflows, while fixed income funds have been seeing inflows.

(Washington)

For an industry that was initially happy with the SEC best interest rule proposal, things have really gone south. On top of the battle over the use of the advisor/adviser title, industry critics are slamming the proposal for a new 4-page disclosure document called a “Customer Relationship Summary” which is supposed to “synopsize an advisor’s services, fiduciary status, fees and other information”. Many say the document is too long and arduous for advisors and will only confuse clients. Charles Schwab, for instance, says that the CSR “could saddle advisors with duplicative and unnecessary compliance challenges”. The firm wants a one-page version.

FINSUM: It is interesting to see that the more the industry has dug into the rule proposal, the more it dislikes it. We wonder how much the SEC will revise the rule following the end of the comment period.

(New York)

One of the world’s most famous fund managers has just gone on the record warning investors that the next recession is likely to lead to a brutal reckoning for markets. Paul Tudor Jones, famed for making a killing in the stock market crash of 1987, said that “highly dubious” asset prices are going to be hit as monetary policy exhausts quickly. He is worried that the US does not have any fiscal stabilizers to help ease a recession. Jones believes that interest rates will normalize and that asset prices will fall in the very long run.

FINSUM: This is a lot of doom and gloom, but it is hard to imagine it really being this bad. A bear market, maybe, but a total collapse seems unlikely.

(New York)

Investors looking for income in the stock market are finding it harder and harder to choose the best equities. Quickly rising short-term bond rates mean many income stocks have seen prices wounded and yields no longer look as attractive. The key, therefore, is to diversify one’s holdings in regards to income. For example, Six Flags is a good income stock (4.3% yield), but instead of combining it with REITs or utilities, try convertible bonds, which are yielding ~3%, but have features which make them trade like growth stocks.

FINSUM: Because stock yields are now lagging bonds yields to a considerable degree, equity-focused income investors are now going to need to be more creative.