(New York)

As if there were not enough worrying indicators out there, Market Watch has featured a new worrisome measure. The paper interviewed a famous Wall Street quant who says that algorithms which track broad social media sentiment are showing significant risks of a serious decline in equities. The big worries on the public’s mind revolve around the escalating trade war between China and the US. The indicator also informs sector picks, to which strategist Yin Luo said “With U.S. stocks, we are bullish consumer discretionary, technology, and industrials over the medium horizon, and are negative on consumer staples and telecom services, where fundamentals remain relatively weak and momentum has been negative”.

FINSUM: We are always skeptical of these kinds of views because what people say on social media is not a very good reflection of what they are doing in their investment account. Further, there are likely mountains of people being assessed by the algorithms that have no trading/investment account, so their impact is nearly non existent.

(Washington)

The trade war between the US and China is intensifying. Investors will already be aware of the tit-for-tat $50 bn tariff packages the US and China have placed on each other, as well as Trump’s plan for a further $200 bn to be applied. However, the news is that Trump is now also preparing a comprehensive package of blockages to Chinese direct investment into the US. The amount of Chinese overseas investment flowing into the US has already plummeted to $1.8 bn in the first half of 2018, down from nearly $50 in 2016.

FINSUM: This trade spat just keeps escalating. The big risk is if China decides to sell US Treasuries and agency bonds as a payback, but we think that is still a few steps away.

(New York)

A big wave of buybacks is about to hit markets, and in an area where they haven’t showed up for a long time. The Federal Reserve is expected to give the green light to banks this week to rain buybacks down on investors. Furthermore, dividends are expected to grow considerably. Banks are expected to return 100% of their earnings over the next 12 months. JP Morgan is expected to hike dividends to 3%, and Citi looks poised to buy back 10% of its stock.

FINSUM: Goldman Sachs and Morgan Stanley might be the odd banks out in this forthcoming frenzy, but otherwise it should be very bullish for investors.

(Washington)

Last week was a brutal one for markets. The Dow fell about 2% over the week as the index approached its longest losing streak since 1978. However, the reality, according to Barron’s, is that the US is winning the trade war, at least so far. Trump has already imposed $50 of tariffs, which China responded to in kind. However, Trump is planning another $200 bn, while China only imports a total of $130 bn of goods, meaning they have much less room to retaliate. Further, US financial markets are much more broad and deep, meaning there are more places for investors to safely stash their money.

FINSUM: China does not have too many options to retaliate. If they devalue the yuan it will really hurt their markets; if they sell Treasury bonds they will either find no buyers (if they sell a lot at once) or the market will just absorb it in smaller bits.

(New York)

For the first time since WWII, Americans are retiring in worse financial condition than the generations that preceded them. Those aged 55 to 70 are preparing to retire with the biggest financial burdens and lowest benefits since Truman was in office. Many have high debt, including paying off children’s tuitions and for aging parents. Their 401(k)s are in poor shape, with a median income of just $8,000 per year for a household of two. According to the study, which was conducted by the Wall Street Journal, more than 40% of American households headed to retirement lack the resources to maintain their current lifestyles. That is about 15m households.

FINSUM: We are having a hard time reconciling this with all the reports of how wealthy the Baby Boomer generation is, yet this comes from quite a reputable source. It must ultimately come down to wealth inequality within that generation.