(New York)

Not only did the stock market fall 3-4% yesterday, but something very unusual happened alongside it—yields rose. Historically speaking, it is rare for yields to rise when there is a big stock selloff, as investor generally flee to the safety of Treasuries. Selloffs can portend economic weakness to come, which makes bonds seem more attractive.

FINSUM: This is quite a worrying development and is reflective of the current environment. No one can get comfort from the “safe haven” of Treasuries because it seems very likely yields will keep rising on the back of the strong economy. In other words, there is no place to hide (other than in hedged investments).

(New York)

With rates rising and yields finally responding in a big way, you may have been wondering which ETFs tend to perform well in such periods. With that in mind, here is a list of the best performing ETFs in periods of rising rates (since 2008). The stats are from thirty day periods of rising rates, which have occurred 18 times since 2008. The best four are: VanEck Vector Oil Services ETF (6.53% average gain), the SPDR S&P Regional Banking ETF (4.9%), the United States Oil Fund ETF (4.54%), and the SPDR S&P Oil & Gas Exploration & Production ETF (3%).

FINSUM: Oil and banking, not really a surprise, but certainly a good reminder for investors. The worst performing funds in the same period tended to be gold funds.

(Washington)

The SEC received over 6,000 comment letters in its public comment period for its new best interest rule. The regulator is currently reviewing those, but the big question is what is the rule’s implementation timeline? A top director at the SEC recently declined to comment on a timeline, saying “We are in the process of going through comments to see what changes if any we should be recommending”, but refused to give a date.

FINSUM: The anecdotal evidence and chatter we are hearing is that the SEC is going to try to move quickly to finalize and implement this rule. Stay tuned.

(New York)

It looks like Michael Bloomberg, founder of the eponymous financial data firm, is eyeing a run at the White House. The move, which the Financial Times quipped was one New York Billionaire trying to replace another as president, surprises no one, as Bloomberg has been hinting at his run for some time. He has given over $100m to Democratic candidates for the midterm elections, something a staffer said was “a hell of a lot of IOUs”. Bloomberg will be 78 years old in 2020.

FINSUM: Speaking purely from a competitive standpoint, we have mixed feelings about whether he would be a good candidate for the Democratic party. On the one hand, he is more centrist than a lot of other Democrats, so could get some Republican votes. But on the other, he is also a New York billionaire, which could turn some off.

(Washington)

In a sign of just how wide-reaching the coming SEC Best Interest rule truly is, FINRA has just acknowledged that the Suitability Rule might be on the chopping block. FINRA’s Suitability Rule requires that brokers choose a product suitable for their client, but is a weaker standard than the proposed BI rule. “If [Regulation Best Interest] is adopted, then we would need to look at our rule set to see if any changes are appropriate … For example, is our suitability rule appropriate? But that is down the road. We need to see how Reg BI is adopted”, says Robert Cook, the CEO of FINRA.

FINSUM: This is not really a surprise, as the BI rule would basically make the Suitability Rule redundant. However, it is certainly a wake up call that things are changing quickly.