(New York)

This is a difficult time to be any kind of investor, but being one trying to get yields out of equities is particularly hard-bitten at the moment. Dividends are being cut left and right, so investors need to turn to other options, but much of fixed income looks very scary. That said “Quality yield is on sale”, according to a fund manager at Tocqueville Asset management who specializes in income investments. “Don’t ignore the rest of the capital structure”, says another fund manager at Socoro Asset Management. For instance, look for things like a JP Morgan Chase preferred security with a fixed coupon of 5% and yield-to-call of 7.72%, or Invesco’s Variable Rate Preferred ETF (VRP), yielding 4.85%.

FINSUM: These are good suggestions. For a yield that will really knock your socks off, take a look at the Virtus Private Credit Strategy ETF (VPC), which owns many BDCs and CEFs and has been beaten up in the selloff, but yields a whopping ~18% net of expenses.

(New York)

One of the small but important pillars of the recent years of the bull market has been Millennials beginning to invest. However, as this coronavirus meltdown has unfolded, that growing support for the market may evaporate. Millennials mostly invest in the market via retirement plans, such as 401(k)s, but given the huge layoffs occurring, they are likely to have to raid their retirement funds in order to get through these hard times. Because of this there is likely to be billions withdrawn from the market.

FINSUM: Millennials were a growing part of the market, but given their often precarious financial circumstances, it seems like their participation will be less for the next year or so.

Dear readers, like you we are concerned for the longevity of small businesses across the country and are eager to receive the Payment Protection Program (PPP) loans and EIDL grants that hundreds of thousands of small business owners have applied for across the US. Seemingly everyone who has applied is frustrated and confused because of all the issues that the SBA, lenders, and the government are having in issuing the loans. We know thousands of financial advisors are also small business owners and have applied for these loans. Because of this, we have started a site – covidloantracker.com – to track the application and issuance of PPP and other loans. This will help business owners understand when and how many loans are actually being paid and will hold media and the government accountable to provide the aid they have promised. Our aim to is to share this site with as many small business owners as possible and then share results with the media on a daily basis as a way to track what percentage of applicants have received their loans.

Please visit covidloantracker.com and fill out the 60 second form.

(Washington)

The President and his team are working furiously on plans for how to open the $22 tn US economy after its unprecedented lockdown. “We’re looking at the concept where we open sections of the country and we’re also looking at the concept where you open up everything”, says Trump. In particular, the White House is looking to open the economy entirely within 30 days, or possibly 60 days, with different schedules being considered. The new strategy is to open the economy based on much more widespread and rapid testing. This will allow workers to be verified as having (or not) the virus and sent back to work.

FINSUM: Just as the coronavirus is a nearly unprecedented occurrence, so is the reopening of the world’s largest economy. It is going to take exceptionally good planning to balance the competing priorities of public health and economic restoration.

(New York)

Advisors need to be careful of how they market and sell annuities to clients. The market is rife with annuities demand as the big losses and volatility of the last month have sent many looking for guaranteed retirement income. That said, advisors need to make sure they walk a fine line in selling annuities. In particular, be mindful of wording you use. Particularly, avoid fear-based selling tactics, and even the word “crisis”—though that could be appropriate in some circumstances. Also, don’t only focus on one aspect of the annuity you are selling, as that can easily be misconstrued as misleading selling.

FINSUM: Some selling techniques are always wrong, but in this scary environment, even the most disciplined advisors could accidentally overstep the line in their approach.

(Washington)

A lot of financial advisors are small business owners, and thousands of them are likely looking for the government’s Payment Protection Program assistance right now. As anyone involved in applying for the program knows, things have been very frustrating and uncertain, with that stress exacerbated by the fact that it is a first come-first serve program. However, there is some potential good news on the horizon. The White House and Senate leader Mitch McConnell are trying to get another $250 bn of loans approved by Congress, which would add to the $349 bn that is already being deployed (apparently it is already being deployed).

FINSUM: It appears as though demand is exceeding supply, so this additional funding is likely to be very necessary.

(United States)

A lot of calculations are being done to see which states will be most hard hit by the current coronavirus lockdown. Within those assessments it is becoming clear that specific housing markets will be hit hard too. The states that look likely to have their housing markets fall the most are New Jersey, Maryland, and various counties elsewhere in the mid-Atlantic. Specifically, Sussex County (NJ), Charles County (MD), Atlantic County (NJ), Passaic County (NJ), Rockland County (NY), Orange County (NY), and Sussex County (DE).

FINSUM: These are all the locations you’d expect. The percentage of income it takes to manage a mortgage and other ownership expensive is quite high in these areas, so there is going to be a surge in delinquency.

(Washington)

Many brokers were hoping that the SEC might grant an extension of the deadline to be in compliance with the forthcoming Regulation Best Interest. Advisors must be in compliance with the rule by June 30th, a previously set date that SEC chief Jay Clayton just reiterated last week. The only reprieve the SEC granted was that the regulator would take “good faith efforts” into account in the initial phase.

FINSUM: Many hoped this deadline would be pushed back into the Fall, but the SEC is dead set on June 30th.

(New York)

Right now there is a big problem in earnings forecasts. UBS points out that many Wall Street analysts have been very slow to update their earnings estimates in the growing coronavirus lockdown. As such, the current spread between estimates and what actual earnings are likely to be is very wide. This often happens in crises, as analysts await more info and data before updating estimates, but it also generally means there is a much greater chance for volatility as earnings releases approach.

FINSUM: We expect that as Q1 earnings reporting approaches in the next few weeks, there will be some big attention-grabbing downward revisions, which could bring on additional bouts of downside-oriented volatility.

(New York)

Ever since the big stock rally of a couple of weeks ago, the predominant mood of Wall Street analysts has been decidedly bearish. Most big research teams have said markets have further to fall before they hit bottom. However, Morgan Stanley has just come out with a contrarian opinion. Commenting that “the worst is behind us”, the bank says it is time for investors to jump back into stocks in a big way. Summarizing their view, the bank said “With the forced liquidation of assets in the past month largely behind us, unprecedented and unbridled monetary and fiscal intervention led by the U.S. and the most attractive valuation we have seen since 2011, we stick to our recent view that the worst is behind us for this cyclical bear market that began two years ago, not last month”.

FINSUM: The worst of the health crisis is still ahead of us, but it could be the case that the worst of the asset selloff is over. Our lingering worry about this is that a mortgage crisis could be brewing as a result of the stop in the flow of money, so we are worried about another sharp downturn in coming months.