FINSUM + Magnifi: Big Changes to Reg BI Likely Delayed by SEC
(March 2021)
One big anxiety that has been on every broker’s mind since mid-January is: is the SEC going to make Reg BI compliance tougher, or introduce something even worse? A lose-lose. Accordingly, there has been a lot of focus on what newly nominated SEC chief Gary Gensler might do to the rule. The Biden administration and the Democratic party have been quite vocal in their desire to replace the rule with a full fiduciary rule, but will that happen, and when? Well, the reality is that the meme stock craziness is likely one of the best things that could have happened to brokers. You may be asking why: because it likely just distracted the new leadership of the SEC for about a year. The meme stock frenzy has dominated headlines and become a Democratic cause, which means newly nominated SEC chief Gensler will likely be focusing on that immediately upon taking over. Bitcoin is another emerging issue given the huge run-up in prices and public focus. Reg BI is obviously very important, but may become second fiddle because of the other, more newsworthy issues.
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FINSUM + Magnifi: Biden Just Let Trump’s Fiduciary Rule Go Into Effect
(February 2021)
In what comes as a surprise to the entire industry, President Biden’s administration has just let the Trump-era version of the Fiduciary Rule go into effect. Almost everyone in wealth management thought Biden would surely use his administration’s powers to stop the rule’s enactment, but they elected to let it go into effect as of this Tuesday, accompanying the announcement with positive and supportive language. The industry’s reaction was immediate and positive, while consumer advocates were disappointed as they were hoping for a more stringent rule from the Democratic administration.
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FINSUM + Magnifi: Putnam Warns Fresh Stimulus is a Major Risk to Markets
(January 2021)
Despite all fears, markets had a fairly strong year in 2020. Why? The answer is pretty clear. Other than some general optimism about how large cap tech would perform during the pandemic, the real savior was huge government stimulus which infused massive amounts of cash into the economy and kept the US out of its worst recession since WWII. Fast forward to January 2021 and we have another major stimulus package on the horizon being pushed by Biden and the Democrats. While many investors might be elated at the prospect, Putnam Investments is warning investors that this could be a death knell for the market. The reason why is that a major new stimulus package would give the market a “sugar high” and potentially cause a melt-up that inflicts serious pain soon thereafter.
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FINSUM + Magnifi: Why Gold is in for a Tough Year
(January 2021)
Gold had a very strong 2020 as investors feared chaos from the pandemic. However, 2021 looks likely to be a weak year for the metal. The reason why has to do with reflation. Everything the new Biden administration is planning to do (or not do) is part of an effort to reflate the economy. Whether that means the nearly $2 tn stimulus package that will be primarily directed to low income households, or new Treasury chief Yellen’s commitment to not intentionally weakening the US Dollar. All of this poses a major headwind to gold, as the metal yields nothing and will suffer as rates moves higher on creeping inflation.
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FINSUM + Magnifi: Why the Biden Administration May Be Bad for Gold
(January 2021)
Gold has been hurting recently, with prices currently around $1,800 after some strong gains over the course of 2020. The big question is where gold is headed now that the vaccine is rolling out and a new administration is coming in. The bottom line is that the Biden administration may pose some difficulties for gold. The reason why is that Biden is planning a multi-trillion Dollar stimulus package that could boost inflation. Gold generally falls as rates rise because of its zero yields. Therefore, the administration’s plans for ongoing stimulus—which will boost the cash flowing into the economy—are a net negative for the metal.
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FINSUM + Magnifi: Why the Senate May Not Even Try to Confirm a New Justice
(September 2020)
Since Ruth Bader Ginsburg’s death over the weekend, the news cycle has been intensely focused on Republican efforts to nominate and confirm a new justice. A lot of attention has been paid as to the exact number of supporters in the Senate as a way of deciphering whether a confirmation can be achieved ahead of the election. However, one fact that is not being discussed much is the reality that many in the Senate don’t even want to try to confirm a justice ahead of the election. The reason why is that while confirming a new conservative justice would be advantageous for them in the long run, holding a confirmation process now could have severe repercussions in the upcoming election. Many embattled Republican senators in tight Senate races could be significantly wounded by confirming a new justice now, meaning that the Republicans could risk losing control of the Senate if they press ahead with a confirmation so close to the election.
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