(San Francisco)

If you were an advisor at Wells Fargo who wanted to move to its independent arm you would face a big barrier—a so-called “tax” on compensation for two years. The tax was faced by brokers who wanted to move to the Wells Fargo Advisors Financial Network, or FiNet. The system is unique among brokers in that it lets brokers go without Wells Fargo totally losing them. However, the two-year tax on compensation was a big barrier. Now, the bank is considering getting rid of the tax so long as advisors sign a two- to three-year contract to stay at FiNet.

FINSUM: This seems a smart move to us as the tide of advisors going independent is only going to grow stronger.

(New York)

Here is an interesting buy. Bill Ackman, found of hedge fund Ackman, has just taken a big stake in Nike (unclear how big). However, the activist investor does not plan to agitate for change, unlike he usually does, because he believes the company is already on the right path. The company is currently changing its strategy from selling its goods at wholesale to a nationwide network of “mediocre retailers” and towards a more consolidated model of selling to only very top stores. It is also trying to be more direct-to-consumer oriented by selling directly through its website.

FINSUM: Nike had been lagging the competition in terms of share price as it seemed to have lost its “cool” edge among the young. It also largely missed out on the athleisure trend. We always maintained it was a good buy and still think so.

(New York)

Many investors are constantly on the look out for the next bubble. Well there is a new one right before their eyes, but many are not seeing it. Leave stocks and bitcoin aside for a moment, and look at private equity. Many say the current market is just like the Dotcom bubble, with valuations way too high and way too much optimism on growth and business models. “It is quite amazing that there is no collective memory that goes beyond five years” say an Oxford professor. Part of the problem is that fundraising has been really strong, which has led to more money flowing into companies, pushing up multiples. The other is the broad availability of debt funding for buyouts, with one industry specialist saying “These are unashamedly incredibly attractive conditions to borrow money. Will that debt be available to buyers in five years’ time? Probably not. Buyout groups are bullish to take the risk in 2018. It’s a ’risk-on’ environment”.

FINSUM: Aside from the reasons cited, the valuation of the stock market is another factor that is pushing up valuations. The sector looks likely to have a reckoning.

(New York)

Small cap stocks are off to a good start this year, up over 3% this month. Furthermore, a strong start tends to signal good gains for the whole year. There is a lot of reason to be positive—the economy is good, regulations are being rolled back, and the bull market for small caps is much younger (less than two years since a big correction). However, risks abound, according to Barron’s, especially in the long-term. Valuations are still high by historical standards, and are actually higher than they first appear. Smaller companies are also more in-debt and more exposed to interest rate rises than many realize.

FINSUM: We think small caps will keep rising so long as the broader market does. Also, the fact that they had a 25% correction which ended in February 2016 gives them a bit more breathing room than their large cap peers.

(Washington)

Special counsel Robert Mueller’s investigation is reportedly pushing forward its investigation and is close to wrapping up the obstruction of justice aspect of its inquiry. Mueller is interviewing people closer to the president’s inner circle, but it is unclear if he will bring any charges. Trump has responded to the most recent interviews by offering to go under oath in an interview with Mueller, which is now scheduled to happen in the next few weeks.

FINSUM: It looks like Trump is going to set the record straight, under oath, with Mueller. Stay tuned.