(Detroit)

Auto stocks have been wounded badly by the COVID lockdown. Car sales have plummeted as buyers do not go to dealerships, test drive etc. The future is not looking great either, as a long recession could crimp consumer spending and hit auto companies where it hurts most—on higher margin large vehicles (like SUVs). Interestingly though, a major Ford insider, COO Jim Farley, just picked up $1m of shares in the embattled company. It was his first open market purchase since at least 2007.

FINSUM: This is a really strong signal from a guy who has been with the company for some time.

(New York)

For the last several weeks, the prospect of a meat shortage has been swirling around the media and markets. However, it had not really become a tangible reality—until now. Wendy’s is apparently running very low on meat, with around 20% of their stores out of beef. Costco is running out of meat too, and is limiting purchases. Meatpacking companies have been suffering too, as their volumes are down.

FINSUM: Trump has already invoked the Defense Production Act to ensure the meat supply, but it is still facing shortages. Something to keep an eye on for restaurants and grocery stores.

(New York)

An update to the SEC’s FAQs page has made something abundantly obvious—the title of “advisor” or “adviser” is about to get a lot more contentious. As part of its new Reg BI package, the SEC is bringing in additional rules around the use of titles. Regarding “advisor”, which is completely ubiquitous, the new rules are pretty clear: you cannot call yourself an “advisor” or “adviser” unless you are registered as an investment advisor. Another important note on this, according to Barron’s, “Broker-dealers that are affiliated with RIAs are generally prohibited from using the terms”.

FINSUM: This is a huge disruption to the lingua franca of the industry, but a big boon to investment advisors. Makes us wonder how much the public will actually care.

(New York)

The last couple of trading days have thrown cold water on that bullish trend that sent the market soaring all April. Weak earnings and huge job losses took their toll, and the reality of a slow-slog recovery are weighing on markets. With that in mind, a former Goldman Sachs fund manager, Will Meade, says that stocks are going to fall another 40% from here. Meade argues that this year will be just like the 2000 dotcom bubble: “The Nasdaq in 2000 did a similar bear market bounce as stocks this year — dropped 40%, then bounced 42% off the bottom retracing 61.8% of its drop. It stalled then fell 43%, making a new low four months later,”. Similar to 2000 is that fact that there is additional uncertainty this year created by the election.

FINSUM: This is far from implausible. As the reality of how hard this recovery might be sets in, markets may completely abandon their exuberance.

(New York)

New data is out showing which independents are gobbling up the most new recruits in the wealth management space. The overall picture emerging is that while April was a very slow month for changes, Raymond James and LPL are striding ahead of the competition through acquisitions and advisor recruiting. LPL has gotten 59 new recruits to join this year, while Raymond James has managed 20, worth $4 bn and $2.8 bn in AUM respectively. Some usual suspects have been absent so far this year. For instance, Advisor Group has lost more than 25 advisors to LPL in 2020 without announcing a single new advisor joining the network.

FINSUM: LPL and Raymond James have done a great job keeping their recruiting wallets open during this tough time. We expect the relationships they are building right now will keep their pipeline strong for the rest of the year.