(New York)

Bloomberg has come out with a very interesting piece about how climate change has been affecting the US real estate market. A new study looked at over 3,000 US cities and mapped them by risk to different types of climate change-drive natural disasters, like hurricanes, floods, and wild fires. What the study concluded was quite striking—in all of those categories, the riskiest locations had seen values drop considerably, while the safest locations had seen major gains. For hurricane surge risk, for instance, the “very low risk” locations had seen annual gains of 8.1% between 2007 and 2017, while the “very high risk” locations saw annual losses of 9.1%.

FINSUM: It is interesting to see that Americans have been taking account of these risks for some time even as the national debate over climate change rages on. This could be a major new differentiating factor in real estate.

(Washington)

Despite lots of hopes that a US-led trade war would never come to pass, it is now happening. The US has just imposed $50 bn worth of tariffs on China, which is an escalation of previous metal tariffs, and appears to be a major step towards starting a global trade war. With that in mind, how can one protect their portfolio? While almost all sectors are affected by a trade war, the worst ones will be industrials, autos, and meat producers. Auto companies are likely to be hit very hard by tariffs, so it is best to stay away.

FINSUM: The other thing the market does not seem to be taking into account is that tariffs seem likely to increase US inflation, as companies tend to pass along the increase cost of production onto consumers. That could be an additional downside risk, but one potentially offset by the chance of recession.

(New York)

2017 was great news for the wealth management market, especially for fiduciaries. The total AUM for the RIA market grew an astounding 20% in 2017, and not all of it was because of market gains. Alongside AUM growth, revenue also increased a median of 15.8%. That led to a great deal of new hires, which correspondingly sent profit margins a bit lower. According to one wealth management market analyst at TD Ameritrade, “Clearly firms feel they are producing enough to warrant the added headcount … It’s a very good sign here in terms of firms willing to reinvest in talent”.

FINSUM: The RIA market continues to look very strong as clients keep moving in that direction.

(London)

American investors tend to be focused on US stocks, which over the last several years has been very fortunate. However, there are potentially great discounts to be had overseas. Barron’s has just picked five overseas bargain equities, borrowing from fund manager Dodge & Cox. According to the CIO of Dodge & Cox, “There’s very strong secular growth in some regions outside the U.S. … If you want to participate, you need to own local-market stocks”. The picks are Itau Unibanco Holdings (Brazil), South African media company Naspers, and French drug company Sanofi. They also like DISH Network and Google at home.

FINSUM: So there are obviously great bargains to be had overseas, but we think it takes a real focus to understand the dynamics integral to picking shares in such different markets. Funds that specialize in doing so seem like a good idea.

(Houston)

Oil has been doing absolutely wonderfully this year. The OPEC countries, in harmony with other big oil producers, have successfully worked together to undermine the competitiveness of the oil market and succeeded in boosting prices (okay, that was a little cynical, but true). Now, that dearth of supplies may be about to change, as OPEC is considering a boost of up to 600,000 bpd. There is considerable disagreement over the possible boost, with Iran wanting to maintain the status quo, and Russia wanting to raise it. Saudi Arabia also wants to boost supply, and the highest figure being pushed is an increase of 1.5 mbpd. Open meets on June 22nd.

FINSUM: This could have a considerable impact on the market. Investors in oil and oil-related equities be aware.