(Washington)

A couple of weeks ago all the talk was about how President Trump was eager to have a one on one interview with Robert Mueller in order to set the record straight. Now, the reports are shifting that Trump should not speak to Mueller. Republicans think not speaking would be wise considering new documents which reportedly show bias in the investigation. One explanation of the recent reports is that Trump is trying to see if not speaking to Mueller would be acceptable to the public, or whether it would hurt his image.

FINSUM: If you think this whole investigation is a witch hunt, then it makes sense that Trump should not take the risk of incriminating himself by talking to what is assumed to be a biased investigator. If you have the opposite view, then not talking looks like he has something to hide.

(New York)

For most of the day the stock market was in positive territory yesterday. However, right at the close, the market was gripped by a swift selloff that pushed it into the red for the day. If the saying holds true—that smart money trades the close—then today could be an ugly one. The drop at the end seemed to foretell more volatility to come, and show that the market has not psychologically recovered from Monday. The market may remain directionless until next Wednesday, when new inflation data comes out. Investors are worried about the prospect of stronger inflation, and thus a quick rate rise.

FINSUM: The markets are trying to find a new baseline for valuations as investors search for a new narrative of where shares are heading. The US economic picture is strong, but there is no tax cut or other major carrot being dangled, which seems to be hurting prices.

(New York)

The supposed battle between robo advisors and human advisors has largely fizzled. Evidence indicates that robos are not stealing funds from human advisors, but are instead attracting entirely new ones, increasing the total fee pool overall. However, a new robo has just launched that should perhaps be worrisome. Discount ecommerce retailer Overstock.com, which has a very diversified base of businesses, has just launched a flat fee ($9.95 per month) robo advisor. While the platform itself should not worry advisors, the implication is that much bigger tech players, like Amazon, may soon be involved, which could dramatically change the landscape.

FINSUM: If Amazon, or any of the other huge tech companies, started robo advisors, then there could be a legitimate issue for human advisors.

(New York)

The march downward in ETFs fee has been unstoppable. Over the last few years the fee war between providers, combined with increasing AUM, has driven down fees to almost negligible levels on many of the most popular ETFs. Now, it looks like free ETFs are on the way, or even ones that pay the holder. In the next year, it seems likely that free or negative fee ETFs will debut. This is possible because providers have huge economies of scale as well as good sources of non-fee income from running the funds, such as lending the securities out.

FINSUM: It is sort of amazing that it may be economical to run free or negative fee ETFs, but it seems like an inevitable outcome to the current fee war.

(Washington)

Advisors have been waiting with their fingers crossed in the hopes that the DOL rule might be done away with, and in its place, a new SEC rule installed. Well, it looks like a positive outcome might be on the cards. The SEC and DOL have been working on a joint rule for a few months and now it appears the new more harmonious fiduciary rule will debut this fall. Now the caveat to this news is that these are estimated dates based on various procedural deadlines, such as the DOL’s delay expiring in summer 2019, but experts in the space agree.

FINSUM: We think the SEC and DOL will debut a rule this fall for comment, probably in late fall, and then try to implement everything by July 2019. Stay tuned.

(New York)

One of the Financial Times’ most respected columnists has just published an article making a grim comparison. Saying that he dreads even mentioning it, John Authers argues that the current state of markets and the context of the losses are very similar to the summer of 2007, or the eve of the Financial Crisis. In particular, just like then, stocks moved higher even as bond yields did, all until a yield threshold is broken, when stocks finally panic. Then, even though fixed income started the worries, equity investors flee into the safety of bonds. The important extension of the argument is that all the associated fallout will not occur this time, as the economy is stronger and more balanced.

FINSUM: So this is only a half comparison. The actual market event may be similar, but the condition of the economy, and its link to markets is very different, and almost inarguably better this time around.

(New York)

It seems like every time there is a big plunge in the market over the last few years one can trace the root cause back to a few products traded by people, but more often, machines. Well, it is no different this time as Bloomberg says two tiny volatility products, which now only have $135m under management, were largely responsible for the selloff. One of the products is the VelocityShares Daily Inverse VIX Short-Term ETN, which will soon be delisted. Despite the small size of the products, traders closely monitor the products’ behavior, and that is said to have caused the panic, as traders predicted how the funds would rebalance and front ran that rebalancing.

FINSUM: Well, at least it was not an algorithmic disaster this time. This sounds a lot like good old fashion human gamesmanship.

(New York)

Goldman has been trying intensely for the last few years to develop a much bigger consumer side of its business. The bank has debuted consumer savings products and tried to extend its reach into consumer products generally. Now, it might be take a huge step. The bank is reportedly in talks with Apple to provide point-of-sale financing to customers who are buying Apple’s products. The bank sees an opportunity to provide lower interest financing than credit cards, where most people charge such purchases. The deal is not closed, and could still fall apart.

FINSUM: There is a whole slew of interesting considerations here. For one, will using Goldman Sachs for financing hurt Apple’s image? Two, is Goldman trying to make a push into credit cards with this move?

(Washington)

On the geopolitical side, most news is ominous. Countries disagree, threaten, embargo, or otherwise make antagonistic acts against one another. But sometimes you get a positive story. Today we want to report on one—the agreement between North and South Korea to compete under the same flag at the Olympics. The two countries, which have been at odds for many decades, will compete side by side in the games, with the women’s hockey team featuring players from both countries. Some see the agreement as placating an aggressive foe, but others see it as a sign of hope and progress.

FINSUM: We find this to be an undoubtedly positive progression, especially since just a couple of months ago the conversation was about how quickly North Korea could have tanks rolling through Seoul.

(Washington)

Fake news has become an important part of the American conversation. People discuss it at work, dinner parties, and at the kitchen table. But one fiercely contested question is whether the right or left side of the political spectrum puts out more fake news. Well, the British seem to have an answer, it is the right, according to the University of Oxford. The university analyzed near 100,000 social media posts to trace the source of fake news, and found that what it calls the “hard right” dominates the use of disinformation.

FINSUM: Obviously take this with a big grain of salt, but an interesting study nonetheless.