(New York)

Stock across the developed world went into freefall today as news spread of the explosion of the coronavirus in Europe and the subsequent quarantine that has been put in place in Northern Italy. Additionally, US data shows business activity contracted for the first time in four years in February. The S&P 500 and Dow are both down about 3.4% at the time of writing.

FINSUM: The virus is now no longer contained to China, with Italy sporting 150 cases and three deaths. Chip companies, travel and tech are getting hit the hardest.

(Washington)

The terrible, no-good, hated first version of the DOL Rule could be on its way back. While most advisors are aware that many of the Democratic candidates want to bring back the old version of the rule, one big surprise came out this week—even Mike Bloomberg explicitly says he wants the rule reinstated. That comes as a bit of a shock because he is seen as the most moderate candidate (he was a Republican while mayor of NYC!).

FINSUM: There is a huge amount on the line for the wealth management industry in this upcoming election. Not only will taxes likely change drastically, but the regulatory environment may shift radically.

(New York)

Fixed index annuities can be an ideal investment if you are looking for a mix of upside gain and downside protection. Many annuities in this category allow a range of choices that mean investors can get much of the upside of an index and still combine it will downside protection. A couple good examples include Lincoln National’s OptiBlend 5 and Delaware Life Insurance Company’s Retirement Stages 7 Fixed Index Annuity. For instance, Lincoln’s offering allows investors to choose exposure to the S&P 500 or the Fidelity AIM Dividend Index and holders can change their allocation each year. Holders can receive a percentage portion of the upside of each index (i.e. up to 35% from the S&P 500 and up to 89% of the AIM Dividend Index).

FINSUM: FIAs can provide a nice mix of benefits and peace of mind, but it is key to remember that the cost of that protection can be quite high.

(San Francisco)

It isn’t just Apple that is at risk from coronavirus. A lot of other tech companies are too, and it makes perfect sense. Apple is far from the only major US tech company that sources many of its parts from China and relies on the country for a significant portion of revenue. The other major companies which are highly exposed are Tesla (20% of its supply and demand comes from China), Dell, HP, and Corning (which looks especially vulnerable).

FINSUM: Corning has a major glass factory in Wuhan itself and relies on China for 25% of its revenue.

(San Francisco)

In many ways the coronavirus just became real for stock markets. Up to this point, fears about how the virus might impact the economy and stocks seemed esoteric and intangible. Then this happened: Apple warned that it would miss its quarterly revenue target because of coronavirus. It is having trouble producing phones because of unstaffed Chinese factories. Accordingly, the company announced “iPhone supply shortages will temporarily affect revenues worldwide”.

FINSUM: This is when the rubber meets the road and it becomes much easier to see how this virus could cause a global recession. The engine of the world (China) is sputtering.

(New York)

Many are currently having trouble choosing between growth and value stocks. On the one hand, growth stocks look outrageously expensive, yet have momentum on their side, while value stocks look like a great buy because of their discount compared to the market. However, there are a handful of stocks where you get the best of both. These stocks have both growth and value characteristics. Here are some of the diverse names to look at: General Motors, State Street, Marathon Petroleum, H&R Block, and Qualcomm.

FINSUM: If you can get good earnings growth and strong value in the same package, what is not to like?

(New York)

Yields have fallen precipitously of late. Ten-years have been touching around the 1.5% mark, and now another big threshold has been crossed—30-years have fallen below 2%. The latest moved downward was propelled by Apple’s announcement about coronavirus being likely to make it miss revenue estimates. The bigger question is about how investors should react. Bond prices are again enormously rich, and worse, there is little dependable yield.

FINSUM: This seems like a post-crisis repeat all over again. With yields so low, it feels like the market has returned to “TINA” (there is no alternative to stocks).

(San Francisco)

The market seems to be ignoring it, but Facebook is facing a major challenge to its business model. One so big in fact, that it is an esoteric threat to its whole way of making money (not to mention the rest of social media). That challenge is the collective ditching of third party cookies, which are little tools used to track users across sites. Third party cookies are used to assemble profiles of user behavior that then allow Facebook to deliver targeted ads. Since third party cookies are now being phased out by major browsers, Facebook (and other social media companies) are going to have a much tougher time assembling behavioral profiles, and this could ultimately have a cataclysmic effect on revenue and profitability. According to a research analyst, and explained by Barron’s, the big worry is that the decline of cookies—which is being called the “cookiepocalypse—will “will lead to ‘signal loss’ for advertisers, leading to reduced returns on advertising, and then an ‘implosion’ in ad spend by direct-to-consumer advertisers”.

FINSUM: As a publication, we understand this better than most. If Facebook ads are no longer as targeted, then their click-through rates will be worse. When that happens, advertisers will get worse overall results. This will mean they spend less dollars and pricing power will plummet. Facebook is definitely working on a work around, but until there is a concrete solution, this is a big threat.

(New York)

An adviser to the World Health Organization has put out a very worrying forecast. He thinks that coronavirus may end up infecting two-thirds of the globe. The forecast is based on studies of the virus’ transmissibility, which has been on display in China. The prognostication also comes after rising evidence mounts that Beijing is falsifying, or at least underrepresenting, the number of cases reported. Scientists have found very odd and near-impossible correlations within the data China is releasing on this virus.

FINSUM: We don’t think China is being fully honest about the extent of cases, which then amplifies the transmissibility of the virus.

(New York)

Ever since the announcement of the Schwab-TDA merger, RIAs have been nervous about their future with the combined custodian. TDA was known for working hard for smaller RIAs, whereas Schwab was not at all. Now, with the combined entity, RIAs are worried about being neglected, or dumped altogether. However, Schwab has just put out a public pledge, saying “When it comes to independent advisors, we’re all in … Today, over half of the firms we serve have under $100 million in AUM. You are the future of this industry”. Schwab also promised no AUM minimums or custody fees, saying they have “no intention to raise them. Because we believe that every firm of every size deserves world-class support”.

FINSUM: This was a more specific pledge, but it will likely do little to calm small RIAs.