(Washington)

Labor unions have long been a hallmark of developed economies. While their power has been on the decline for decades in the US, they are still a principle part of the labor market. Now, with their grip already in decline, they might be dealt a death blow by the Supreme Court. The court is about to hear a case on whether it is constitutional for labor unions to require government workers to fund the unions which represent them. Because of the decline in private sector unions, about half of all US union membership is now held by government employees, so a ruling against mandatory union dues could likely spark the end of American unions as we know them.

FINSUM: The decline of unions has been a complex and long-term affair. Aside from this case, we wonder if the power of unions might increase or decrease as automation takes further hold of the workplace.

(New York)

Despite a seemingly very hawkish Fed, bond traders just aren’t buying it, according to Bloomberg. Traders think the economy is burning very hot, and that the Fed, despite rhetoric, is actually content to just stick to only gradual rate hikes. According to one CIO, “The bond market is telling the Fed we see rising inflation pressures and if you are going to be gradual and crawl into three more rate hikes this year we are not going to wait around”, continuing “The long end of the yield curve is tightening for the Fed”.

FINSUM: Fed minutes did not show that the bank was considering four hikes this year, and the market thinks they should be.

(New York)

Unfortunately, there have been many school shootings and other massacres over the last few years. Each of them was followed by a brief outcry to increase gun regulation, to which there was no government response. However, something feels different this time around, and President Trump is moving to tighten some gun rules. Now it might be Wall Street’s turn to step back, as big asset managers such as BlackRock are looking at ways to strip gun companies out of the portfolios of clients who do not want to invest in them. Gun sector stocks have slumped badly since Trump’s election, mostly because the threat of new regulation—which drives gun sales—seems to be gone.

FINSUM: We are very unsure of how things will proceed here, but we can say that there does seem to be increasing political momentum towards more gun control for the first time in many years), which could influence Wall Street.

(New York)

Many investors are currently worried about the bond market. There is a lot of uncertainty over just how much rates and yields will rise and what that might mean for the economy. Well, Bloomberg is taking a strong stand on the issue, arguing that a bond Armageddon is on the way. The paper says that all the focus has been on ten-years, but that 30s might be where the danger is. They are within shouting distance of their 2015-2017 highs, and are very close to the 3.24% level, which would signal the difference between an orderly selloff and a full-on rout.

FINSUM: There may be some short-term volatility, but our overall view is that there won’t be a cataclysm in bonds. Global populations are aging and people need income. We expected yields to stay in check and spreads to narrow even if sovereign yields rise.

(Washington)

The fiduciary rule is starting to throw its weight around despite the fact that it is only half-implemented and very much on the regulatory rocks. Massachusetts is currently going after Scottrade under the rule, and now Barron’s says there will be another victim—annuity sales. The asset class saw its total sales fall 8% in 2017 to $203.5 bn, and those figures are expected to fall further this year unless the fiduciary rule is reversed. “The impact to IRA annuity sales was much more pronounced than nonqualified annuity sales”, says an industry expert.

FINSUM: This is a huge market that is being eroded by the rule. Hopefully the SEC and DOL come in with a new rule this summer.