(New York)

It was a golden period, but it seems it only lasted less than a year. 2017 was a great year for the global economy. For the first time since the Crisis, the whole world seemed to be growing in unison. Even Europe, long in the doldrums after its sovereign debt crisis, had blossomed. But just as that growth was finally harmonizing, it is changing again. US growth still looks solid, but the rest of the world, especially Europe, is beginning to stagnate. China, too, leaks weaker, and both the ECB and Chinese central bank have held off on any rate rises.

FINSUM: We wonder if a global recession is coming. The US still looks strong, but then again we are coming off a very strong late stage tax cut.

(Washington)

Well, it was inevitable. The industry has officially started its major fight against the new SEC rule which seeks to stop brokers from using the title of “advisor” (or “adviser”). The National Association of Insurance and Financial Advisors (NAIFA) is on a winning streak, having been part of the group to take down the DOL’s fiduciary rule. Now it is turning its focus to the SEC title rule. According to NAIFA “We are still analyzing the almost 1,000 pages, and we’ll certainly comment on it, but one area where we have an issue already is the limit on who can use the term ‘advisor”.

FINSUM: It is critical to mention a couple of things here. One, this group, which has been very successful in taking down regulation, is an association of mostly brokers, not fiduciaries, so they have a keen interest in solving this situation. Secondly, the word “advisor” is part of their own name, so the new rule cuts to the heart of their very existence. We have a feeling this component of the SEC rule might prompt as much backlash as the DOL rule did.

(New York)

Investors look out! After years of booming asset prices on the back of extraordinarily loose monetary policy, everything looks like it is about to implode. Not only is the Fed hiking and looking hawkish, but the ECB is in the middle of a covert meeting likely about how to end QE. China also looks close to reigning in its economy. Altogether, the economy on which current markets have been built looks set for change, which might cause big problems for equity investors.

FINSUM: So far “normalization” of interest rates has been quite slow, which has let investors sort of ignore the process. If things start accelerating quickly, then markets may react very sharply.

(Washington)

In a widely expected move yesterday, Jerome Powell announced the first hike of his stint as the head of the Fed. The move was a quarter point higher to between 1.75% and 2%. Powell promised to be more open and transparent about the Fed’s outlook than in former times. Powell presented the rosiest outlook on the US economy in memory, repeatedly expressing strong optimism. He indicated that there were two more hikes planned for this year.

FINSUM: All the optimism comes across as quite hawkish despite Powell’s intentions to seem gradual. We appear to be on definite course higher.

(New York)

Before President Trump got elected, and immediately after, there was a great deal of excitement that financial firms were going to experience a flourishing as the US cut back heavily on financial regulation. 500 days in that hope has failed to significantly materialize. While small and medium sized banks have benefitted, and the DOL’s fiduciary rule is gone (great for wealth management), large banks have not seen gains. For instance, the Fed has made stress tests for large banks more stringent.

FINSUM: Banks had the prop trading rules (Volcker rule) weakened recently, so that is positive, but otherwise there hasn’t been much change.