(Washington)

In what comes as a real eye opener, the House passed a bill this week that would block the SEC’s ability to enforce its new fiduciary rule. The driving force behind the rule, you guessed it, Maxine Waters. The measure came as part of a broader bill regarding the funding of federal agencies. The bill now heads to the Senate, where it will likely be changed and then re-voted on. Democrats, who are in charge in the House, are worried the SEC’s rule does not go far enough to protect investors.

FINSUM: The interesting thing here is that this bill is likely not totally dead in the Senate. We wonder how hard the Democrats will stick to this part of it.

(New York)

The White House is considering a new plan to cut capital gains taxes. The administration is seeking to do so by indexing capital gains rates to inflation, a move that would significantly help wealthier Americans lower their tax bills. Interestingly, the White House is considering advancing the bill in such a way as to bypass Congress. The impetus for doing so is that they want to make sure the changes hit before the 2020 election.

FINSUM: This is quite logical and could have a big impact. Imagine you could exclude 2% of an annualized 8% gain from all capital gains taxes!

(Washington)

Trump and Xi are meeting this weekend alongside the G20, and the encounter seems likely to pivotal in the trade war between the US and China. No one is expecting a whole lot, but there is some hope of a potentially positive new path. The more likely outcome, however, appears to be an escalation of the conflict. If that happens, with both sides raising tariffs and escalating rhetoric, a mild global recession over the next six quarters seems probably, says UBS. This would likely prompt global rate cutting by central banks.

FINSUM: This seems like a decent forecast. The irony is that because of their ability to stimulate, the US and Chinese markets will probably be hurt the least by this, as it will more likely be emerging markets that take a hit.

(New York)

Gold has been doing well recently. Between global trade turmoil, a falling economy, and decreasing yields, the metal has thrived. Here are three reasons the gains won’t reverse. The first is that the stock market continues to look risky, meaning gold’s allure as a safe haven seems assured. Secondly, yields on bonds have a definitively downward direction, which makes gold more attractive. Finally, inflation is unlikely to stay low forever. When it starts to rise, it would give investors another reason to bet on gold instead of bonds.

FINSUM: We don’t really think inflation will be much of a factor for gold in the immediate term, but the first two points are material.

(Washington)

In what comes as a potentially very good sign, the Treasury Department announced yesterday that a trade deal with China was close to becoming a reality. Steve Mnuchin, head of the Treasury, said that a deal with China was “90% of the way there”. On a slightly less positive note, he continued “The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the U.S. economy to get balanced trade and to continue to build on this relationship”. Trump will meet Xi at the G20 gathering this weekend.

FINSUM: Mnuchin is not particularly given to exaggeration, so we take this 90% number as pretty meaningful. The downside is that the Chinese aren’t at the negotiating table right now.