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Thursday, 18 April 2019 13:53

The Next Big Fiduciary Battle Will Be Here


The anti-fiduciary rule crusaders have been more successful than anyone could have imagined. Back in 2017, the slew of industry groups fighting the DOL’s rule looked woefully outgunned. But in time, they completely succeeded. They are coming off another fresh victory as well—in Maryland—but the next battle looks to be even bigger. That battle will be in New Jersey, a state that seems to have taken the stage as a leader in the state-level fiduciary rule push growing across the US. Unlike Maryland, New Jersey is committed to a rule, which makes this fight more substantial. The new rule in NJ also has the support of some advisors there, giving the proposal more traction.

FINSUM: In our view, it will likely be harder to stop the spread of these state level fiduciary rules than it was at the national level, if only because it is harder to concentrate opposing resources across the whole US. Also, if a state truly has conviction about the rule, it seems more likely to come to fruition.

Thursday, 18 April 2019 13:50

Buy JPM and Goldman on the Cheap

(New York)

If you want to pick up some great bank stocks at a great discount, now is the time to do it. Despite great earnings, JP Morgan still looks inexpensive. Goldman Sachs does too. Both banks saw big trouble in their trading divisions in the first quarter, which has led to some attractive valuations. The problem for investors is that markets that keep doing what they have will not be bullish for the banks (i.e. low volatility), so options strategies may be the best way to play the situation.

FINSUM: Nothing would be better for this trade than if there was another big market disturbance that drove a bunch of volatility, which is quite good for trading revenue.

(New York)

Where is the economy headed? Investors seem to be torn at the moment. On the one hand they seem to feel that the economy must be headed south because of the long running expansion and recent inversion, but on the other, there is little data to really back up that claim. Accordingly, every new piece of economic data is being closely watched right now. The newest in is retail sales, which had fallen a bit recently. Today, though, is a different story, with March retail sales seeing their biggest jump in 18 months, rising 1.6% month on month.

FINSUM: Seeing evidence that consumers still look healthy is a testament to the fact that the underlying economy still looks strong.

Thursday, 18 April 2019 13:47

Democrats Call for Mueller to Testify


Attorney General Barr held a press conference this morning as a prelude the to lightly redacted Mueller report that is being released today. Generally speaking, Barr stuck to his previous summary of the report, saying there was nothing that amounted to obstruction of justice or collusion. He did give some further details, however, mentioning that there were ten instances where Mueller highlighted possible obstruction of justice. As a response to the statements, the Democrats, led by Pelosi and Schumer, are calling for Mueller himself to testify as soon as possible.

FINSUM: The political chaos about this report will not abate until the text is released and Congress and the nation hear from Mueller. We think it will happen soon.

Wednesday, 17 April 2019 12:20

The SEC Is Making a Hard Right on Policy


The Trump administration has slowly but surely exerted its influence on the SEC. After two and half years, the changes are reaching their zenith. The last Democrat at the SEC is set to step down later this year. He is technically entitled to stay through June 2020, but is likely to leave before the autumn, when he is set head back to academia. The departure will open the door to a more conservative appointment. It would also mean there are only three commissioners left at the SEC, two of whom are Republicans, giving them an advantage in SEC matters.

FINSUM: This could have all sorts of ramifications for policy, including the best interest rule. We expect this may have some significant impacts on the the BI rule plays out.

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