(New York)
The last few months have been bleak for the US housing market. There has been a steady stream of negative data showing that the market is definitively slowing. Now a new one is emerging—bank lending is contracting quickly in the space. The fall off is so strong that banks are laying off workers in lending units. Both sources of demand for mortgages—refinancing and new home purchases—have dried up as interest rates and housing prices have risen. July showed the fifth straight month of declining home sales, coming in the time of the year when they should be strongest. Speaking about the state of home prices and mortgage demand, the chief economist at Fannie Mae says, “people are saying, ‘at these prices, and with rates rising, I’ll stay where I am’”.

FINSUM: We believe the US is in for a long winter of falling home prices. We think the market is at a turning point right now where sellers are trying to cling to high prices, but buyers have finally stopped giving in.

(New York)

The Fed looks set for another hike in September, and likely another before the end of the year. That means that fixed income is a very tricky market, as many bonds will likely see losses. So how can one protect their portfolio but still earn reliable income? One option is to buy floating rate bonds. Luckily, there are several funds that can help investors own floating rate bonds. Some of them include the Fidelity Floating Rate High Income (4.36% yield), the iShares Floating Rate Bond ETF, the BlackRock Floating Rate Income Strategies Fund, or the Eaton Vance Floating Rate Income Fund.

FINSUM: We think floating rate bonds seem like a good strategy for the current environment. Just be careful of high credit risk in some of these funds.

(New York)

You wouldn’t usually think of muni bonds when you are looking for juicy yields (at least not investment grade munis). However, if you look further out on the yield curve, there are some very interesting bonds. For instance, there are AAA rated 15-year munis yielding 2.7%, up from 2.2% earlier this year. Comparable two-year munis have just 1.7% yields, representing a 100 basis point spread versus the treasury market’s 29 bp spread. This is the steepest the muni yield curve has been since 2000, which creates opportunity at the long end of the curve.

FINSUM: Most advisors will be aware that even with the currently low yields in munis, the tax exemption for high income clients make the bonds very attractive, so this is just icing on the cake.

(New York)

Those trying to earn defensive income right now should look at stocks with strongly growing dividends. Rising dividends from stable companies seem like a good way to protect capital and earn income in this rising rate era. Accordingly, three companies to look at include Swiss pharma company Novartis (3.5% and growing), Pepsico (3.3% and likely to grow), and tech company Cisco, who business is growing solidly below the radar and yields just above 3%.

FINSUM: These seem like well-thought out picks, especially because some of the dividend growth is speculative, and importantly, will be driven be real operating performance.

(New York)

The big rout in emerging markets is starting to look like a full blown crisis. So far the US has proven itself immune to the turmoil, but the contagion is spreading, according to both JP Morgan and BlackRock. The pair say that a herd mentality has taken hold and that investors are indiscriminately selling emerging market assets, so matter what the value or long-term outlook. Even those with holdings that look strong are selling for fear of getting trampled by the rest of the herd, thus feeding the cycle further.

FINSUM: The big selloffs now include not only Argentina and Turkey, but South Africa, Brazil, and Indonesia. Given the Fed’s hawkishness and trade wars roaring, there is no end in sight for the turmoil.