(New York)

Sometimes looking at raw materials is a great way to get a signal on the economy, especially as they are frequently leading indicators for what is coming. Well, one metal is screaming of bad times to come—silver. Gold is priced at 82x silver, the highest level in two years, which is a seen as a poor indicator. “Money managers tend to favor gold when they think markets might turn rocky and discard silver when they are worried about slower global growth crimping consumption”, says the Wall Street Journal. 55% of demand for silver is for industrial purposes, which links it more with fundamental metals like copper.

FINSUM: So this is an interesting insight, but because silver is not a pure industrial commodity (it is also somewhat of a value store), this comparison does not seem quite as pertinent. Gold to copper would be more interesting.

(New York)

Something very curious is going on in the REIT industry—the funds are liquidating their holdings. REITs have not performed well over the last couple of years, which means many share prices are quite low relative to the market. This means they also frequently trade at a discount to the value of their underlying holdings. In response, many REITs are selling off their property holdings to make a return and bring in cash instead of issuing new shares. REITs have fallen victim to rising interest rates, but are not, in general, using the cash injections to pay down debt.

FINSUM: Considering the position they are in, this does not seem like an unwise move. It also likely signals there is a big buying opportunity in REITs if only you can stay in them long-term.

(New York)

Well it didn’t look like it would be a great year for bonuses, but 2017 bonus data is just in and it was a good year for the industry. Bonuses were up a whopping 17% this year and nearly eclipsed their pre-Crisis levels for the first time. The big bonuses largely reflected the growth of the leveraged loan market, which boosted fees across the industry. The New York state comptroller makes a good point about the data, saying “The large increase in profitability over the past two years demonstrates that the industry can prosper with the regulations and consumer protections adopted after the financial crisis”.

FINSUM: With bonuses getting to near pre-Crisis levels, it seems to be another sign that things are getting toppy.

(New York)

Despite the fact that the DOL says it will no longer enforce the fiduciary rule in any capacity, those in the industry say that firms should not abandon their fiduciary rule compliance. The reason why is that despite all the momentum against the rule, it is still not officially gone. That means the DOL could change course and decide to enforce the rule at any time, giving no comfort about getting rid of fiduciary rule compliance for firms.

FINSUM: So our view is that the whole fiduciary rule playing field is more uncertain after this court ruling. The SEC could still be dissuaded from proposing a new rule, and the current rule could still hold up in court, with both possibilities completely changing the picture.

(New York)

The Dow has not been doing so well lately. Last week it dropped to its lowest level of the year, declining further than in its worst bout of volatility in February. The reasons why are becoming harder to explain with every day of losses. While isolated flare ups used to be explained away, the situation is growing more complicated for investors. A growing risk of tech regulation, a looming trade war, higher interest rates—all are weighing on stocks. That makes the markets much more complicated and hazardous for investors, and it has become commensurately harder to make good decisions.

FINSUM: The market seems to be in a very treacherous period. Its failure to regain momentum after the fall in February seems ominous to us, and we do not see a clear end in sight.