(New York)

Boom looks ready to turn to bust in the real estate market. While those paying attention will already know that commercial real estate looks past its peak, and residential real estate has just started to show signs of weakness, what US investors may not realize is that the phenomenon is global, and that fact is more important than ever. Because of the rise of the global wealthy and their transient lifestyles, global real estate markets have become more correlated, and that means additional bad news for US home prices. All across the world, from London, to Sydney, to Beijing, to New York, urban home prices are weakening as inventories rise and the sector switches from a seller’s to a buyer’s market.

FINSUM: The real estate market used to be less correlated, but the huge boom in urban real estate over the last decade means that all areas will probably come down together too. To recap, US home purchases have been falling at the same time as inventories have finally begun rising. It seems like a rough period is coming.

(Boston)

The moment that many asset managers have been dreading has finally arrived. Fidelity announced yesterday that it was slashing prices on many of its funds, and crucially, offering two new index mutual funds with no fees and no minimums. Thus, the Rubicon has finally been crossed—the first broad index funds with zero fees, and no minimums. Many top asset management stocks fell considerably on the news. Remember that asset managers can still make money on funds with zero fees—through stock lending—but they need considerable scale to make that money meaningful.

FINSUM: It was only a matter of time before this happened. We expect Vanguard will follow suit quite soon, as will BlackRock, as lower fees have been by far the biggest selling point in the market for years.

(New York)

Dividend stocks usually don’t fare as well in periods of rising yields, but guess what, yields have been largely paused for some time. Further, investors may be wise to stay away from tech for awhile as it seems the sector is going through a reckoning. Well, interestingly, the famed Dividend Aristocrats—a group of companies who have raised their dividends for 25 straight years—has just one tech company in it, ADP, the payroll processor, so it is a very good way to earn income and hideout from the tech turmoil. Furthermore, and somewhat surprisingly, the average P/E ratio of the group is 18.1x, below the S&P 500’s average of 18.8x.

FINSUM: This seems like a nice stable group to buy into, and the ever rising dividends provide a nice cushion for any potential losses.

(New York)

Those hoping the current turmoil in the technology sector may turn around the fate of gold will be upset by new data. Gold has suffered its worst start to a year in almost a decade despite the fact that the US equity market was in a correction for much of it. Now, economic data shows that demand for the shiny metal is at its lowest since 2009. The big drop in drop demand did not stem from industry, but instead from investment markets, with ETFs buying ~60% less gold in the last year than the year prior.

FINSUM: Gold is in a tough and interesting spot. On the one hand, it is easy to see why rising rates have depressed gold prices. But on the other, it seems gold have should have benefitted from all the geopolitical and market instability of this year.

(Washington)

There is a lot of excitement right now about the possibility of the new capital gains tax cut. The Treasury is looking into whether to effectively cut the capital gains tax rate by allowing investors to account for inflation when reporting their gains. The cut is estimated to amount to $100 bn over the next decade. However, the Treasury is uncertain if it has the authority to make the cuts on its own, a move it would undertake by simply redefining the meaning of “cost”.

FINSUM: So evidently the first Bush administration looked into this in the early 90s and decided that the Treasury did not have the legal authority to make this change on its own.