Inflation is picking up as PCE and CPI numbers are setting decade-long records, and the Fed is rapidly trying to regain control. The American people are beginning to show signs of angst as 65% of American’s say that Biden’s admin has not put enough attention on handling inflation and almost 60% say the same thing about the economy. This comes a swathe of low approval rating numbers come in where he has fallen almost 20 percentage points all the way down to the low 40’s. Overall about half of Americans say they feel frustrated and disappointed in the Biden admin. Biden’s focus has been on a series of regulatory and economic-centered packages, and many American’s don’t feel he is focusing on the issues they ‘don’t care about’.
FINSUM: Biden should stop pushing for another big fiscal package immediately if he has any hopes of reigning in inflation in 2022.
Wells Fargo has been one of the dominant figures trying to improve advisor headcount and it looks as though some of those efforts are paying off. Steven Tahn is moving from JPMorgan, where he has been since 2012, and bringing $2 million in GCD as well. Wells has had a series of declines for the last couple of years and has fallen short of targets when it comes to recruiting and retention. However, signs of improvement are there and their series of penalties and bonuses for client retention could be starting to pay off.
FINSUM: We’ll be keeping our eyes on the biggest changes in recruiting and retention in 2022 among financial advisory firms.
The bond market blues have been difficult as rising rates have started to really deflate a lot of funds. However, active bond funds have had an edge because not been pegged to indices they have freely navigated to localized emerging market debt. From HSBC to BNP many of the largest funds are buying up localized EM debt because many of these countries’ central banks tightened monetary policy last year and the rate hikes are already built-in. So as bond prices go down in the U.S. and inflation risk remains high, hawkish central banks in Russia, South Africa, Indonesia, China, and South Korea have all soured because localized currency means higher real payout and with relatively lofty interest rates the funds have a more promising horizon.
FINSUM: 12-Months ago the U.S. was looking at Emerging Markets as crazy for tightening the belt too quickly, but now these emerging markets are ahead of inflation and their bonds are soaring.
The Biden Admin hasn’t been shy about wanting to tighten the regulatory belt on Wallstreet and the financial world, and another step is being taken. The SEC is considering changing the disclosure rules when it comes to acquisitions of public companies by hedge funds. Currently, HFs have a 10-day buying period to which the public doesn’t have to be made aware of a purchase. Chairman Gensler is making it clear they are eying tighter rules when it comes to disclosure. The current rules are over 50 years old and were meant to bring more information symmetry between the public and private investors. The SEC is looking to increase transparency and give the public more time to adjust.
FINSUM: This will definitely give the public an advantage, but we’ll see how the SEC votes when push comes to shove.
Fidelity is about to take direct indexing to a whole new level. The asset manager/custodian/broker-dealer is launching its new Fidelity managed FidFolios product, which is a retail-focused direct indexing suite with only a $5,000 minimum and a 0.40% fee. According to Think Advisor “The Fidelity Managed FidFolios combines direct indexing with fractional share trading, which allows clients to allocate assets among multiple positions based on dollar amount rather than share size”. Morningstar gives context to the launch, saying “This is the most mainstream form of direct indexing from a most mainline asset management and provider of investor services seen to date”.
FINSUM: Direct indexing is a heated battleground for asset managers right now, with Fidelity, Vanguard and others in the mix. This seems like a big step.