(Washington)

The pool of Democrats keeps moving left. In what comes as a no surprise (but was not a sure thing), Bernie Sanders has just announced his candidacy for the 2020 election. His platform is going to be built around three pillars: free education, Medicare for all, and a $15 minimum wage. Sanders narrowly missed the Democratic nomination in 2016 and has a particularly strong following among the young.

FINSUM: Politics could not be more polarizing right now, so in many ways it makes sense that the Democratic candidates are quite far left. The difference between now and 2016 is that those leftist narratives have more popular traction than the more centrist position Hillary Clinton adopted then.

(Washington)

We think we might have found an area when Democrats and Republicans might agree. Here is an interesting argument—Fannie Mae and Freddie Mac distort the housing market and negatively affect renters. This is a conclusion from the Wall Street Journal, which found that the subsidized loans from the agencies artificially lowered interest rates on multi-family properties (apartment buildings), which helped developers in acquiring them. The developers then go on to raise rents. In some cases, owners of big units refinance using agency mortgages and are therefore rewarded for raising rents.

FINSUM: From the left’s view, this hurts everyday Americans by raising rent prices. From the right’s view, this is an example of how big government distorts the economy. All that said, in single family housing, the agencies still seem to have benefits that outweigh their negatives.

(New York)

As our readers will know, we spent the better part of last week at the Inside ETFs conference. As part of our time there, we are planning to feature a couple of ETFs which we think might be interesting to advisors. The first one we want to feature is a special fund from Legg Mason, the fund is called the Legg Mason Low Volatility High Dividend ETF (LVHD). We were lucky enough to meet with one of the fund’s specialists, Josh Greco, at the conference, and his passion for the fund’s approach really shined through. The fund’s own words describe it best, it seeks to track “the investment results of an underlying index composed of equity securities of U.S. companies with relatively high yield and low price and earnings volatility … LVHD may benefit investors who want income but are concerned about the volatility that can come from traditional equity income investments”. Basically, the idea is to get yield and upside, without so much of the volatility that is traditionally associated with equities. Mr. Greco contextualized the utility of the approach succinctly and convincingly, explaining that as clients’ lives elongate they are going to need to stay in equities longer to get capital appreciation. Accordingly, this fund seeks to de-risk some of that necessary exposure while still giving significant upside and yield. The fund has about $600m in AUM, is widely available, has an expense ratio of 0.27%, and a dividend yield of 3.48%.

FINSUM: In our mind, this fund does an excellent job of fusing some of the best elements of fixed income (yields and less volatility) with the best part of stocks (capital appreciation). It may be a great fit for older clients that need to keep a significant allocation to equities. It is also quite affordable at 0.27%.

(New York)

We thought our readers might like to see some high conviction stock buys from top ranking sell-side analysts. All of the following seven picks are rated a “strong buy” by top ranked analysts and have price targets 20% or more above the current price. The picks come from a wide variety of sectors and include: Turtle Beach (HEAR), Alibaba (BABA), Cigna Corp (CI), Marathon Petroleum (MPC), Amarin Corp (AMRN), and Teladoc Health (TDOC).

FINSUM: These are diverse picks both in terms of geography and sector. Amarin and Alibaba are the most interesting for us. The former because of buyout rumors by Pfizer, and the latter because of its strong growth characteristics.

(Washington)

In what sounds like a classic case of “buy the rumor, sell the news”, a major Wall Street figure is arguing that as soon as the US and China reach a trade deal, the big rally in risk assets will be over. The former CEO of Cantor Fitzgerald, Shawn Matthews, argues that “Right now, it’s a risk-on mentality -- you want to be long riskier assets until you get a deal with China … When that happens you certainly want to be looking to scale back”. One of Matthews’ worries is that bond markets are following suit, signaling to him that this is a false rally. “If it was truly a risk-on world and people believed it and it was an extended trade, then you would see the 10-year start to back up. That’s a clear sign there’s some concern about what’s going on out there”, said Matthews.

FINSUM: This is quite an interesting take on the whole situation. We are going to hold off on giving our full view until we have had more time to digest, but we thought this angle was definitely worth sharing.