(Stockholm)

For the first time in half a century, Sweden is seriously prepping its country for the possibility of war. Growing national anxiety over the threat of Russia has led the government to send out 4.7m information pamphlets to all households informing them of what to do in the event of war. “All of society needs to be prepared for conflict, not just the military. We haven’t been using words such as total defence or high alert for 25-30 years or more. So the knowledge among citizens is very low”, says the government. The country is also considering whether it should join NATO.

FINSUM: The Baltics and Scandinavia are particularly exposed to possible Russian military aggression, so it makes sense they are nervous.

(Washington)

On Wall Street has run what we consider to be a very bad article, but we thought our readers might enjoy, or cringe, in hearing about. In an article entitled “Why Financial Planners Should Support a Strong Fiduciary Rule”, the director of consumer protection for the Consumer Federation of America manages to make almost no discernible argument. Attacking those who oppose the fiduciary rule, the article fails to make any salient points in support of the current DOL version of the rule. In fact, the most interesting part of the article is actually an inadvertent support of those who oppose the DOL rule. The author acknowledges that commissions-based payments are no more inherently conflicted than fee-based accounts.

FINSUM: This article was incredibly mind-numbing. While we have been in consistent opposition to the DOL rule, we are not against fiduciary duty in principal, and have been trying to find arguments in its favor. In this piece we kept reading and reading waiting for a good point to be made, but it never arrived.

(New York)

If you are a hybrid BD/RIA, you need to pay attention. FINRA is trying to loosen the strictures in which you might find yourself. In particular, FINRA wants to make changes to its outside business activity rule. It no longer wants to force hybrid B-Ds to have compliance tracking for their RIA businesses. Being legally liable for such businesses can prove a major cost burden. “The motive for taking a percentage payout on the RIAs advisory business will go away”, says one industry insider.

FINSUM: This will certainly be a welcome change for the many hybrid RIAs who deal with the current FINRA rule.

(New York)

The media and many bond market gurus would have you think the ceiling is caving in on bonds. Talk of a massive bear market, surging inflation, and big losses abound. How to make sense of it all? The answer, if there is one, is that reversals in rate environments tend to take a long time, and have historically lasted 2-3 decades before reversing back. Therefore, bond yields may continue to climb steadily, but this shouldn’t be bad for the stock market, so big losses may be avoided. In fact, slowly rising rates can spark structural bull markets. It would also be helpful for pension funds to have higher yields as they could be safe in assuming better returns, helping fund the huge national pension deficit.

FINSUM: We just are not that worried about bonds. The Fed still seems fairly timid, there is high natural demand for yields because of demographics, and inflation and growth aren’t all that strong.

(San Francisco)

While most publications have been running stories arguing that it may be time to get out of the FAANGs, Barron’s has a run a piece to the contrary, saying that they have more room to run. While the piece admits that the group of stocks is under a lot of pressure and is highly priced, it contends that it is not time to pull out yet. The argument is that despite accusations of misbehavior and threats from Trump, the sector will remain the centerpiece for growth investors. If the economy continues to chug (meaning stay under 3% growth), then tech’s steady growth will remain attractive.

FINSUM: We tend to like this view. Despite how richly these companies are valued, we think there is still room for medium-term value growth as regulation is still a way off and their fundamental businesses are solid.