(Washington)
Advisors should breath a sigh of relief today. Following the fiduciary rule’s resounding court defeat last week, the DOL has done what the industry has been hoping it would—accept the decision. Following the ruling, the DOL now says it will not enforce the fiduciary rule in any way. A DOL agency spokesman said clearly “Pending further review, the [Labor Department] will not be enforcing the 2016 fiduciary rule”. The DOL will also very likely not challenge the court’s ruling.

FINSUM: Given that this is an entirely new DOL versus the one that drafted the rule under Obama, their behavior makes total sense. The way is finally nearly cleared for a new rule.

(New York)

The old fears are rising anew, and not without reason. With volatility now back in a big way, fears are once again stirring about the reliability of ETFs. In previous market flare ups there have been some major ETF losses. The ETF industry is worth $4 tn and has never been through a bear market at its current size. The biggest fears are in fixed income ETFs, where the “liquidity mismatch” is greatest between the tradable ETFs and the illiquid underlying bonds.

FINSUM: With rates and yields set to rise, there could be some volatility in fixed income, which means there could be some big issues in fixed income ETFs, especially in the most illiquid areas.

(New York)

While the acquisition of Whole Foods by Amazon put a great deal of fear into other grocers and investors, things have quieted down since then. Now, the fears appear to be warranted as Amazon’s plan is becoming apparent. Amazon will offer Whole Foods groceries online at the same prices as in store, with free delivery for Prime Now members. The strategy will make it very hard for other grocers, like Kroger, to compete, as Amazon will likely lose money on every transaction. Kroger, and Walmart, are both launching their own delivery programs, but both will cost between $11.95 and $9.95, making them less competitive for short shopping trips.

FINSUM: Walmart can afford to lose money to grab market share, as can Amazon, but Kroger and other small grocers may be very vulnerable.

(Washington)

Though he had remained silent on the issue for three days, Senate Majority Leader Mitch McConnell has finally spoken out on the Trump-Mueller tension. McConnell held a press conference yesterday to commend the job Robert Mueller is doing and to admonish the President to let him finish his investigation. McConnell said Mueller “should be allowed to finish his job”, and that “I don’t think Bob Mueller is going anywhere … I have a lot of confidence in him”. Republican Senator Lindsey Graham also said that if Trump tried to fire Mueller without cause than it would be an impeachable offense.

FINSUM: We think Trump is sharp enough not to try to fire Mueller as it would create an absolute political nightmare.

(London)

If you are thinking about putting some money into foreign stocks, you might want to wait. Overseas stocks need to go through a bear market before they are worth buying again, and they may be well on their way. The MSCI EAFE is seriously underperforming the US market, but don’t be fooled, it has historically done so when when it is ready to continue to underperform, not the other way around.

FINSUM: The big question is why foreign stocks are underperforming The perceived wisdom is that investors want to chase fast moving growth stocks, which are predominantly in the US.