(New York)

Despite the rally, stocks are still down 5% from the January peak. But Invesco, it is down around 15%, which Barron’s argues presents a great buying opportunity. Invesco’s mutual fund business will earn less income if stocks fall, but unlike others, it may be a big beneficiary of the next bear market. Two reasons for this include Invesco having a strong balance sheet to make low-priced acquisitions when times are tough (as it did during the Crisis) and the fact that it has a great smart beta business, which should do well in tough times. The stock currently trades at a 44% discount to BlackRock on an earnings multiple basis, making the price attractive.

FINSUM: Invesco seems like it would be good to use in a pair trade in a down turn as its relative performance should be better than competitors.

(New York)

PIMCO, perhaps the most famous bond investor in the world, has just published a piece covering their view of where yields are headed. Their conclusion is that they do see the risk for rates rising as the US budget deficit grows and the economy strengthens, but that on the whole they are not too concerned about a big jump. Their view is best summarized in their own words, “Nevertheless, we believe powerful forces are working against a permanent increase in the trajectory of economic growth in the U.S., including the aging population, productivity trends, sovereign indebtedness, credit growth, and an imbalance between savings and investments”.

FINSUM: Our readers will have noticed that this view exactly matches what we have been saying about bond yields.

(Washington)

A couple of weeks ago we ran a piece quoting the SEC saying that it was trying to get advisors who had violated client disclosure rules to come forward themselves. The promise was that if they voluntarily came forward they would be treated with a much lighter hand. Well, the SEC has showed the other side of that coin this week, saying “Those of you who counsel investment advisors, we hope you will counsel them to participate in the program … If not, we promise that if we find them later we will punish them more severely”.

FINSUM: The SEC is really going to throw its weight around on this issue and it seems like advisors who have broken the rules would be well advised to come forward.

(New York)

One of the financial industry’s most astute crisis callers has just told Barron’s that she thinks we are in for another financial crisis. Sheila Bair, former head of the FDIC, has successfully called the Enron scandal and the subprime crisis, and now she sees another one looming. The context is that Trump and the White House are leading the charge for less bank regulation, which Bair sees as crazy given this point in the cycle. According to her, “To loosen capital now is just crazy. When we get to a downturn, banks won’t have the cushion to absorb the losses. Without a cushion, we will have 2008 and 2009 again.”.

FINSUM: We are not supportive of too much loosening of bank regulation. Banks have been very profitable since the Crisis, and it is not as if the current regulatory paradigm is over-constraining them

(San Francisco)

In what looks like a continuation of the recent meltdown of the Wells Fargo brand, a new scandal has come to light. The company is having several senior executives resign as a new Justice Department investigation is underway into bad practices in its wealth management unit. The accusations surround overcharging customers and inappropriate advice to wealth management clients.

FINSUM: Who knows how big this one might blow up? The scandal in its core banking business had not really affected the wealth management unit so far, but that may change.