(Chicago)

Earlier this year LPL launch its new Strategic Wealth Services program. It is a special program designed to help advisors with all aspects of setting up their own business, including everything from finding an office to setting up a tech stack to executing payroll. Best of all, LPL promises to do this with “zero out-of-pocket costs for the advisors”. Despite the pandemic, the program seems to be doing well. Once advisors from a Wells Fargo team that recently departed for LPL commented on the program that “LPL’s new affiliation model really appealed to me. It allows me to be an independent advisor but solves for the business operational needs”.

FINSUM: This is a smart program. It appears specifically designed to address the multitude of anxieties advisors feel when moving to an IBD.

(New York)

The market is falling again the day after the Labor Day holiday, and many tech stocks are nearing or in correction territory. It is a rough start to the week, and Goldman Sachs is not offering much hope. The firm published a research piece this weekend which was bullish on stocks overall, but said that another 10% correction may arrive soon. Goldman says that if investors start to doubt the trajectory of the recovery in the face of the super quick snapback in economic output that the market has priced, then stock prices will likely fall.

FINSUM: On the whole Goldman was pretty positive, but they also clearly allowed room for a short-term “shake out” in share prices. This correction we have on our hands might also lead to a change of market leadership, which would be an interesting shift.

(New York)

Bank stocks have been heavy maligned by investors since COVID erupted. Several bank indexes, like the KBW, are down significantly on the year. KBE, a popular bank ETF is down over 30% on the year versus a small gain for the S&P 500. Ultra-low interest rates and loan losses are the big factors weighing on banks, but within the latter could be the spark of a rally. Banks have been setting aside tens of billions of Dollars in loan loss reserves, and seem to have been very bearish in their allocation of said reserves. Such reserves are also understood to likely have peaked at the end of Q2. That means that if loan losses aren’t as bad as forecast, some of those billions will likely be allowed to flow into the profit category for banks, allowing great earnings reports which could prompt a rally.

FINSUM: Banks are play on the recovery and can be had very cheaply. Additionally, this loan loss reserve aspect creates a nice catalyst for why a rally would start.

(New York)

The real estate space—at least parts of it—have been red-hot since COVID began. Residential real estate in particular has done well, as the fall in interest rates has sent mortgage issuance surging. One area of residential that you might want to stay away from, however, is apartments. Investors have been shying away from the sector. For instance, the FTSE Nareit Equity Apartments index is down 21% to-date. The big fall comes despite landlords saying rent collections are strong. The reason why seems to be the big rent reductions in coastal cities. Landlords in New York, San Francisco etc have had to drop rents by 15% or more to keep tenants and attract new ones, and that figure doesn’t even price-in other incentives, like months of free rent.

FINSUM: Our view here is that COVID will likely lower demand for urban apartments, since the pandemic highlighted some of the weaknesses of densely populated buildings. However, occupancy overall seems likely to stay strong.

(Washington)

While it has not been nearly as tumultuous as the first time around, the DOL 2.0 rule-making and approval process has already been rocky. There was a great deal of upsettedness over the short comment period. So much so that the DOL reversed course and offered a public hearing to gather more opinions. That was held this week. However, the DOL says no further public hearings or comment period will be extended (despite previously mentioning this possibility). Accordingly, it is looking very much like a rule will be brought forth ahead of the election, significantly in advance of where the timeline looked to be even a few weeks ago.

FINSUM: The DOL is really pushing the pace here. It seems like this might get on the books before the election, but it would still be quite easy for Biden to undo if he takes office.