Goldman Sachs released their latest economic forecast and predict the U.S. will grow at its second-highest rate in over 15 years. The 3.1% prediction would only be outpaced by the K-shaped recovery in 2021. Moreover, they said there is a lower risk of a recession in the next year than the rest of Wall Street with about a 15% chance. Attributing much of the inflation to supply chain issues, Goldman seems to be leaning on the latest core PCE inflation numbers that the Fed cares most about which were on the decline. The biggest ongoing risks to the world economy are China and the continuing Russia-Ukraine war.

Finsum: Goldman believes the Fed can thread the needle and hit the soft landing that many say is impossible, time will tell if they can.

Pick your favorite recession signal and there is a chance it's flashing the warning signs. Most are eyeing the 2-to-10 year yield curve which inverted in early April. Investors worried about the recession should turn to high-yield bonds, but specifically, those ‘sin’ goods are the best remedy for the recession. Alcohol and Tobacco are two of the best performing industries in the 12-months leading to a recession and the years after. Food and beverage, utilities, and healthcare all are great performers as well. The high yield bonds to avoid are telecommunications and retail shopping, as their returns can vary drastically.

Finsum: Junk bond yields are relatively high right now and less sensitive to Fed moves, high yield bonds are a potentially good alternative right now.

The bond market has had extreme difficulties as of late, and most investors are looking to annuities for an income alternative, but what questions should they be asking themselves. The first is what is the term of the annuity? Duration and commitment play a pivotal role in how you are assessing the asset. How much is the surrender charge? Look for de-escalating surrender charges if you may get out early. How does your annuity generate interest? Many indexed annuities can be linked to the markets like the S&P 500 which can give stock exposure without as much risk. Finally, can you withdraw early, and what are the liquidity constraints? You may want to be able to have a flexible withdrawal amount in case of emergencies.

Finsum: With more investors turning to annuities, it’s critical advisors understand why they are using them as a financial vehicle.

The biggest hang up for most investors when it comes to direct indexing is the heavy minimum investment fees that usually accompany them. Fidelity shocked markets with their $5,000 minimum, but Altruist just lowballed them with a $2,000 product. This strategy used to be exclusively available to wealthy individuals but is now more accessible. Investors hold the underlying stocks that make up the indexing product which gives nice advantages when it comes to tax loss harvesting and green investing. The product will give investors exposure to global stock and bond markets as well as acap weighted 500 largest US stocks, and be available at a variety of risk levels.

Finsum: With the huge tax savings and lower investment minimums, direct indexing is more competitive with ETFs than it was even a year ago. 

MSCI Inc. has come out firing against the hedge funds' strategy in dealing with ESG. Many prominent hedge funds, like AQR, have not only invested in ESG but are shorting poor ESG scoring companies in an attempt to raise the cost of capital. MSCI VP of ESG, Rumi Mahmood, says this is not an effective ESG strategy because it decreases transparency and doesn’t align corporate and investor interests. On top of that, he believes shorting poor ESG metrics won’t affect the cost of capital for these companies. MSCI finds that engagement over time is the alternative and better pathway to influence a company's behavior.

Finsum:  There is not enough evidence out there as to the effect of short selling on capital formation, however, companies shorting traditional energy have taken a bath.