(Washington)

The Democrats are finally getting their time with Robert Mueller this week. Mueller is set to testify for a full five hours before the House Judiciary Committee and House Intelligence Committee on Wednesday. Democrats are seen as likely to push him to give further details on his investigation, especially into obstruction of justice claims, while Republicans are expected to probe him on bias within the FBI.

FINSUM: Everyone seems to agree—it is hard to imagine anything happening at these hearings that would change anyone’s mind.

(New York)

Gold has been stuck in a bear market for a long time. However, it is getting close to completely breaking out of its funk, as the yellow metal is at a 6-year high. Gold is being driven by worries over the economy, falling yields, and a potentially weaker Dollar, as well as geopolitical fears. UBS summed up gold’s position this way, saying “[Due to the] declining cost of holding gold as rates remain low or continue to fall, gold’s appeal as a diversifier and alternative asset amid the current macro environment is increasing”.

FINSUM: Our only worry about gold is if rate cuts cause a risk-on move by investors that will leave gold in the dust.

(Washington)

Astute observers will have noticed that President Trump last week nominated Eugene Scalia to head the DOL following Acosta’s resignation. Even sharper readers will know that likely means the DOL’s newest version of the Fiduciary Rule is likely dead. Scalia was instrumental in the first version of the rule’s defeat last year. He was the lead counsel for SIFMA and the body of trade groups that defeated the rule. With him becoming head of the DOL, it seems highly unlikely the Labor Department would advance the newest version of the regulation.

FINSUM: We think Eugene Scalia is the DOL head that most of the industry has been waiting for. He has a reputation as a fierce anti-regulation warrior, so is hard to imagine him advancing the newest version of the Fiduciary Rule to any degree.

(New York)

For many years, emerging markets were a must-have in every investors’ portfolio. The idea was that a large swath of the world was on an inevitable path towards economic parity with the west, and that there was a great deal of money to be made by investing in that growth. For several years, that view held. However, changes over the last decade mean that such a thesis is increasingly in doubt as many of the factors that drove EMs have fallen away. In the words of the Financial Times, “high commodity prices are a fading memory. Trade is stuttering and global supply chains are being disrupted. Far from catching up with the developed world, many supposedly emerging markets are growing more slowly”.

FINSUM: It is not just economic either. Governments have not cleaned up as fast as many had hoped, which means the law and governance aspect of EMs has hardly improved.

(New York)

It has been forecasted for some time, but now it is finally happening—US banks are hiking dividends. After getting the all clear from regulators after successful stress tests, US banks are beginning to hike their dividends. For instance, Morgan Stanley and Citigroup hiked their dividends by 13%+ recently, with both now yielding 2.5% or over. Bank stocks have been beat up over the last year, with Morgan Stanley down 10%, for instance.

FINSUM: On the one hand, bank stocks looked undervalued and now have attractive yields. On the other, if you think we are headed towards a slowdown, then it is not a good time to buy financial shares.