(London)

The US stock market is looking increasingly volatile at the moment. Valuations are high, there are a number of fears, and worries over a trade war are causing daily swings. So what is an investor to do? One good option is to hedge US equity exposure with some international equities. Overseas stocks had a mixed first quarter but have been doing well recently. The reason why appears to be that they have underperformed the US for years, but are now finally catching up. While lending standards are tightening in the US, they are loosening elsewhere, causing a consumer spending boom. Further, higher US valuations make overseas stocks look “cheap”.

FINSUM: Having some overseas allocation seems like a good idea right now. The only real weakness we see, beyond Dollar risk, is that a trade war would negatively affect all countries, at least in the near term.

(Washington)

The standoff between the president and special counsel Robert Mueller is heating up once again. On Monday, federal agents raided the offices of Trump’s personal lawyer Michael Cohen, which Trump vehemently protested in the media. This has led to speculation Trump may now move to fire Mueller. In response, the White House officially said yesterday that they felt doing so was within the president’s authority. GOP lawmakers have warned Trump not to do so, but say they will not protect Mueller.

FINSUM: Whether or not Trump is allowed to fire Mueller, we think it would cause an unprecedented political firestorm if he were to do so. Just look at what happened to Nixon after he fired a special counsel.

(New York)

Despite a tumultuous market over the last few weeks, stocks are at least maintaining their ground. This may give investors hope that prices can make a turnaround and the bull market can resume. However, beware history, as in previous periods of Fed tightening, valuation multiples have tended to decline, a fact that spells trouble for this market.

FINSUM: If higher rates mean lower multiples, then the 18-month outlook is not too strong for this market. However, the economy may not be as strong as many expect (look at the most recent jobs report), which could keep the Fed at bay.

(San Francisco)

Tech stocks have had a poor last couple of months. March was especially brutal, with tech falling 4%. And while some think tech stocks still look like a good bet, Barron’s has put out an article based on a BAML opinion which contends that tech stocks look very vulnerable. The key reason why is what the piece calls an “Occupy Silicon Valley” mindset (recalling the Occupy Wall Street movement from several years ago). This mindset leaves the Valley at risk in two very core ways. Firstly, by regulation, which the government (and the public) seem increasingly intent upon delivering. And secondly, to a tax raid, especially if government finances continue to deteriorate.

FINSUM: We are of a mixed mind on tech right now. On the one hand, these arguments hold water with us. But on the other, the underlying businesses of tech companies are strong and this could all blow over.

(New York)

Fidelity, one of the largest US wealth managers, is shaking up its fees, and not just in small pockets of the business. The company is moving to a single unified fee schedule that works entirely by how much assets under management a client has with Fidelity. Existing clients will have their fees frozen so as to avoid paying more, but for many, services will cost less than before, while in certain areas they will cost more. Fidelity is also cutting the cost of its robo advisor to 0.35%.

FINSUM: This is happening across the industry, and this sort of move was led by Merrill in 2016. Nonetheless, it is a pretty significant change.