(San Francisco)

There has been hype for several years about the chances for the growing tech industry to absorb and dominate some of the domain of the finance sector. Examples already abound, such as tech companies taking market share in currency transfers or in every day payments. Amazon is providing payment services and financing to merchants, for example. Now big banks are fighting back, pushing regulators to subject tech companies to the same rules and scrutiny to which they are forced. They argue that not doing so will hinder transparency and threaten the global financial system.

FINSUM: This just seems like another of the many areas where a regulatory push is mounting against tech.

(Washington)
Advisors need to be aware and involved, say some of the top names in the industry, because the fiduciary rule is headed in directions that nobody wanted. While the DOL rule was far from perfect, what is in the works is worse—a patchwork of dozens of individual state rules set to fragment the US wealth management market. The SEC is working on a harmonized rule, but according to the CEO of Cetera, “If you are not actively engaged in that discussion with the regulators, then you are not fulfilling your obligations to this profession. You should be getting everyone you know, every advisor you know, to be a good citizen”.

FINSUM: We don’t now how much any individual advisor can do to affect the outcome of the fiduciary rule saga, but suffice it to say that things are quite dicey right now and every little bit helps.

(New York)

So those following the news will have noticed that Bank of America’s key stock market indicator, the “Bull & Bear”, has been flashing red for the last couple of weeks. Now, the brightness is getting stronger. The recent rush out of Treasuries and into stocks has been the fastest ever, which has BAML worried that markets are about to crash. The rotation amounted to $102 bn flowing into stocks in January alone, which BAML calls “massive”.

FINSUM: The move has been more of a stampede than a flow, but then again, there are a lot of reasons to be worried about rising rates, especially as new Fed leadership is coming in.

(San Francisco)

One doesn’t quite know how to feel about the news, but the gut instinct is that it is negative. Apple’s earnings came out yesterday, and the company reported its greatest profit ever. But guess what, sales came in weaker than expected for the new flagship iPhone X. iPhone sales dropped 1% in the fourth quarter (the most important time of year), which has scared many into thinking the new phone has not sparked the next replacement “super cycle” that the company and analysts hoped. Apple did mention that the quarter was a week shorter than in the previous year, and that iPhone sales would have been 22% higher had they been equivalent.

FINSUM: Okay so the note about the length of quarter is relevant, but the overall impression is that the iPhone X has failed to live up the hype. And it makes sense to us—have you heard any friends raving about the new iPhone? We certainly have not.

(Houston)

MLPs can perform well during periods of rising rates, such as in the last tightening cycle. While they are broadly more risky than bonds, they can provide good returns. Many MLPs collect inflation hedged payments, so they should perform better than bonds in a tightening environment. As an asset class, MLPs have been holding back on payouts, but these should accelerate in 2019 and 2020. Three names to look at are Enterprise Product Partners, yielding 6.1%, Magellan Midstream Partners, yielding 5.2%, and Antero Midstream Partners, yielding 4.8%.

FINSUM: Those yields look really juicy don’t they? And they are moderately inflation hedged, which is also quite promising. Worth a look.