(Beijing)

It has been more than 18 months of brinksmanship in the making, but the US and China are apparently set to seal a phase one trade deal. The deal will be signed at 11:30 am in the White House. The deal leaves out a lot of the most difficult and contentious issues between the countries, but is a sign that things are improving. The FT summarizes the substance of the deal this way, saying “It commits China to making $200bn in additional purchases of US goods, including farm products, and other pledges on currency and intellectual property, in exchange for a small rollback in some tariffs and an indefinite hold on further punitive measures out of Washington”.

FINSUM: The key thing here is that both countries want this work out and this deal is a step in the right direction. We find this quite positive in the grand scheme of things.

(New York)

The stage was set for Goldman to knock it out of the park. JP Morgan had just released the best US bank earnings ever and other banks were looking strong heading into earnings season. Goldman has a new CEO and has made big changes to its business. It felt like this might be the start of a new era for the bank signified by some great earnings. Instead, it all fell flat. Goldman’s net income fell a whopping 26% and missed earnings per share estimates by a mile. That said, revenues did rise 23%, but litigation costs hurt the bottom line.

FINSUM: It wasn’t meant to be this quarter, and don’t be fooled by the big revenue growth as it mostly came from a huge surge in fixed income revenue, which is not sustainable quarter to quarter.

(Washington)

Rollovers are one of the key areas of focus for advisors within the new SEC Best Interest rule (“Reg BI”). This is not just because of their importance for advisors generally, but because there was still a good degree of uncertainty over how the new rule would be applied to the area. Recent edits to the rule clarify its application, and the results are likely to seem a little unfavorable, as they are more strict than previously. In the past, rollovers were only subject to Rule 2111 if securities were to be bought or sold in the plan. This left a bit of wiggle room. However, the new Reg BI has been modified and Rule 2111 now applies to any situation, regardless of whether securities are involved. Thus, rollover recommendations by broker-dealers are now completely governed by the best interest standard in all scenarios.

FINSUM: Not unexpected, but many were hoping for more flexibility. At least there is now confirmation.

(New York)

Ban of America says it is a very good time for investors to buy TIPS, or Treasury Inflation-protected securities. The bank thinks inflation expectations are going to rise this year and they are bullish on long-dated TIPS. The call is notable as many fund managers lost money with similar bets after the Crisis, when many thought inflation would jump alongside QE. This time may be different as the Fed has explicitly said it would let inflation run hot to compensate for the slow inflation we have had for the last decade.

FINSUM: We just don’t see inflation rising much in the near term. There are still a lot of worries about the economy. We feel like 2019 would have been the year for big inflation worries/rises, but it didn’t materialize.

(New York)

If you are looking for dividends in this low rate world, you still have some good options. What about dividend growth stocks? They can be a nice investment in a low rate market, but where to look? Healthcare and tech stocks look like a great place. Analysts think dividends in those sectors will rise 10% and 9% respectively, handily outperforming dividend-focused sectors like utilities and REITs. Healthcare looks particularly healthy. Check out Abbvie (5.3% yield), Gilead 3.9%), Pfizer (3.9%), and Eli Lilly (2.2%).

FINSUM: Profits in healthcare have been ballooning and executives seem to be quite focused on returning money to shareholders.