(Washington)

The SEC rule has received a lot of attention. Those in the industry have been moderately positive on the rule because of its degree of leniency, but no one really thinks it is a good rule, especially not investor protection advocates. Today we ready an opinion of the rule by an industry laywer, and it was so compelling, we had to share it in its entirety. The below is from Steven Lofchie of Cadwalader, Wickersham & Taft LLP: “Now, in many respects, we have ended up with the worst of all possible situations: (i) the Reg. BI adopting release fails to make any strong intellectual argument for why it is not reasonable to expect that broker-dealers can be fiduciaries to their clients; (ii) Reg. BI fails to make any distinction between sophisticated and unsophisticated natural person clients (treating Warren Buffett no different from a high school dropout); (iii) Reg. BI imposes significant new obligations on broker-dealers that very well may reduce the willingness of broker-dealers to provide "full-service" brokerage to retail investors and instead result in retail investors seeking any level of advice to potentially pay a much higher charge to an investment adviser; (iv) Reg. BI fails to satisfy any of the critics who wanted a fiduciary obligation imposed on broker-dealers; and (v) states are adopting their own "suitability" rules - urged on by Commissioner Jackson - thereby moving U.S. securities regulation away from a unitary system of regulation to a fractured Brexit system.”.

FINSUM: We have never read any commentary that does justice to the new rule better than Mr. Lofchie’s. It hits the nail on the head on why it is a failure from all sides.

(New York)

It has been years since there was much good news in US real estate. The market has been slightly pessimistic for years, but finally there might be some reason for optimism. New home sales actually rose in June, a sign that health is improving in the all-important US property sector. Sales increased 7% from May, but the average home price stayed flat from one year ago at $310,400.

FINSUM: With rates likely to fall and yields having already tumbled, it would not be surprising to see a short-term pop in real estate. It would actually be quite worrying if that doesn’t happen.

(Munich)

In a very worrying report from the EU< European manufacturing is in a “free fall”. Data from Germany, the bloc’s largest economy, shows that the country’s manufacturing industry is declining rapidly. “In manufacturing, the business climate indicator is in freefall”, said the head of a highly regarded economic research group. The chief economist at Commerzbank added that “there is far and wide nothing to be seen of the second half recovery hoped”, continuing “Germany is in a grey area between a marked growth slowdown and a recession”.

FINSUM: Europe certainly looks headed for a recession (unless the ECB can save it). Will the US catch the economic flu this time, or remain Teflon America?

(San Francisco)

Facebook announced this week that it would pay a $5 bn fine to settle a Free Trade Commission investigation into privacy violations. The exact same day, Facebook announced that the FTC had launched another probe, this one perhaps more worrying. The new probe is a formal antitrust investigation into Facebook. The company disclosed the investigation alongside its quarterly results yesterday.

FINSUM: So Facebook and big tech not only have the DOJ on them now, but now the FTC too. End of the golden age of the FAANGs?

(New York)

Annuities are an important part of both advisors’ businesses and their clients’ portfolios. However, the options in the market can be overwhelming, especially if you are an advisor new to the asset class. The annuities business has cleaned up its act in the last few years and is finally getting some respect because of its ability to alleviate retirees’ worst fears—running out of money in retirement. Well, Barron’s has put out a list of the top 100 annuities in the market, including how to pick them. The list is quite extensive, so here is a link. The choices are broken down into numerous categories and include offerings from Lincoln National Life, Transamerica, Prudential, CUNA Mutual Group, and beyond.

FINSUM: Not only do annuities help alleviate the fear of running out of money for retirees, but they are also popular with Millennials, who are financially conservative and have a similar concern about future income.