(New York)

Annuities have come a long way in the last few years, with industry standards and selling behavior becoming much cleaner. However, annuities sales are still a challenge because it is often hard to get an individual to trade a large, liquid lump sum for payments that can often be far in the future. With that said, TIAA has an annuity it debuted last year that might prove quite helpful. The provider’s Income Test Drive program allows buyers of annuities to opt out of their income agreements within two years without any penalty. The program is part of a wider trend in annuities, according a product manager in the space, saying “They used to have one product try to be everything to everybody, and the costs outweighed the benefits. Now there are more streamlined options”.

FINSUM: This TIAA option seems like a very good way to help investors bridge their anxiety about trading a lump sum for future income.

(New York)

Retail and recession have a complicated relationship. On the one hand, a downturn in the economy will almost always hammer consumer spending, which means the sector is broadly exposed. However, such economic challenges often create huge victors in the space as it becomes a winner-take-all environment. With that in mind, here are some stocks to own, and some not to. In the last recession, it was cost-conscious retailers, like Dollar Tree and Dollar General that surged. High-priced, discretionary merchandise, like Williams-Sonoma and Restoration Hardware, did the worst. This seems likely to play out again, so take a look at Aaron’s, Dollar General, Five Below, National Vision, and Ollie’s Bargain Outlet. 

FINSUM: Hard to argue with this logic, but we would not be surprised if the coming (potential) recession offered some surprises in terms of consumer behavior.

(Copenhagen)

The inverted yield curve may be odd, and negative yields in Europe may be strange, but the weirdest current perversion of markets (or is it the “new normal”?) is in Denmark specifically. That oddity is the negative rate mortgage. Yes, homebuyers are getting paid to take out mortgages to buy a home. Jyske Bank, Denmark’s third largest lender, is offering a mortgage rate of -.50% before fees.

FINSUM: So this is already happening in Europe, but it may have limited effects given the continent’s demographic struggles. It is hard to imagine this happening in the US, but if it did, we bet it would cause a housing boom.

(New York)

Bloomberg has published a very insightful article about the current state of the market. In particular, it offers a view of how the big run up in bonds is likely to end. The fears that are driving the bond market—mostly that de-globalization will cause a recession—can only end two ways. Either the recession and de-globalization never materialize, in which case yields shoot back up, causing big losses in bonds. Or, the breakdown of global trade does happen, In this scenario, goods likely become significantly more expensive (especially in west) because there is no more labor and cost arbitrage. In this scenario, inflation then jumps, again sending yields much higher and sparking losses. In other words, the current bond market can only end in tears.

FINSUM: This was a very insightful argument in Bloomberg today. While there are some nuances that might cause some different outcomes, the basic contention is quite astute. Stocks seems a much better bet.

(New York)

The inverted yield curve has investors feeling down on their luck at the moment. What is the best way to play the turmoil and volatility? The answer may be in two seemingly unlikely places. The first is in energy ETFs, especially oil. Energy stocks have traditionally done very well during inverted yield curves, so an ETF like XLE seems like a good bet right now. Additionally, tech ETFs such as Vanguard’s VGT could be a good play, according to Bloomberg. Tech has often done well during inversions in the past.

FINSUM: Recommending a tech ETF right now is the height of contrarianism. Tech is basically caught in the middle of the trade war, and frankly, seems like a bad buy.