(New York)

Many who are worried about the future of the stock market take solace in the fact that the US economy looks strong. If the economy is doing so well, the market is less likely to fall, or so the logic goes. However, looking at history, that understanding is unwarranted, as stocks lag well in advance of economic downturns. In fact, the market usually tops out well before any economic downturn begins, and by the time a recession actually starts, stocks will have long since been in a bear market.

FINSUM: This is an excellent point. Just as the current bull market started during the fallout of the Financial Crisis, the bear market will probably start when the economy looks like it is in full swing.

(New York)

Aside from the general tensions over rising rates and what they mean for the economy, investors need to pay attention to another important consideration. That consideration is that with each basis point of increase, stocks are looking less attractive as the allure of dividends fades. While for years the view has been that “there is no alternative” to investing in equities because of weak bond yields, that perception is now fading as yields rise to a place where they start to offer acceptable returns. “Investors now have a viable alternative to cash with yields finally above inflation levels”, says the chief investment strategist at BlackRock.

FINSUM: It might not a recession, but the simple emergence of a viable alternative might be what ultimately unwinds this bull market.

(New York)

One way to judge the fear level of investors in regards to inflation is to look at flows into TIPS, or Treasury Inflation-Protected Securities. The bond market had its biggest bout of volatility in around a decade over the last 6 weeks, and one big upshot of that has been a surge into TIPS, as investors seek a safe haven for the strong rise in inflation which they see coming. BlackRock’s TIPS ETF, for instance, just hit a new high with $25 bn under management.

FINSUM: Interest in TIPS has a lot to do with the Fed and rates, but also with the government’s budget deficit, which is set to widen.

(Washington)

The word is that Robert Mueller’s probe into a possible obstruction of justice charge against President Trump is almost concluded, but that he is thinking to delay filing to charge to allow him to wrap up other facets of the investigation. The reason why is that the Mueller team reportedly thinks filing the charges would make it harder to finish the rest of the investigation because of an increasing lack of cooperativeness on the part of witnesses, in addition to Trump likely moving to shut the investigation down.

FINSUM: If Mueller actually filed charges against Trump it would be a monumental political bombshell. Mueller is sharp enough to not try to do that half-cocked.

(New York)

The life of an advisor at a wirehouse is certainly changing. In the new broker-protocol-collapsed world, things have become different. At UBS, the changes are very clear—advisors are being paid more, but it is harder to leave. The average broker for UBS earned about $471,000 in 2017 (skewed by big earners), up 13% over 2016. However, at the same time, the firm dropped out of the broker protocol, making it harder for advisors to breakaway. UBS spent 7% less on new broker recruiting last year.

FINSUM: A 13% pay bump is a pretty strong number, but it could likely be much higher if one were to go out on their own.