(Washington)

In what could be could news for those worried about the Fed hiking us into a recession, one of the Fed’s top leaders has just come out with a very dovish tone. St. Louis Fed chief Bullard says the Fed needs to slow its pace of rate hikes to preserve its credibility. “Inflation expectations in the U.S. remain somewhat low, suggesting that further normalization may not be necessary to keep inflation near target”. He suggests that the best policy going forward may be to freeze hikes.

FINSUM: One of the things that has worried us about the Fed is that they seem to be viewing rate hikes as some sort of automatic pre-determined path towards normalization rather than basing it on actual inflation numbers.

(Washington)
The DOL rule is on the way out and the SEC best interest rule is on the way in, but that did not keep the SEC from taking a parting shot at the DOL. Outgoing SEC commissioner Michael Piwowar, long a critic of the fiduciary rule, said yesterday “I think it was a terrible, horrible, no good, very bad rule … It set up an unworkable, impossible set of standards for people to comply with. The Department of Labor couldn’t have cared what we thought and what you all thought, didn’t listen to Finra, didn’t listen to state regulators or the insurance regulators, and went forward with a rule that proved to be unworkable”. Piwowar is expected to leave the SEC on July 7th following his resignation.

FINSUM: We could not think of a more comprehensive critique of the DOL rule. We think the SEC really “gets” it.

(New York)

There have been some serious warnings about real estate from reputable sources lately, but not much data to support them. To this point, most fears have been centered around how rising rates might hurt the market, but none of that had emerged in the data, until now. A new US housing report has just showed that sales of existing US homes fell 2.5% in April. Low inventory and higher prices seem to be putting a dampening effect on buyers, says the Wall Street Journal.

FINSUM: This is a worrying stat for us, and its importance is elevated by the fact that the figure comes from April, which is part of the all-important spring home-buying season. The next few months of data will be very important.

(New York)

Now might be a good time to buy dividend stocks, especially if you think rates and the economy are likely to stagnate. But even if not, having solid income stocks is always a key feature of a portfolio. With that in mind Barron’s has come up with a list of 12 income stocks with good cash flow and very solid fundamentals, all of whom are supposed to see growing cash flow in 2019. Some of the names cited include: Kraft Heinz, Target, Merck, Johnson & Johnson, 3M, Eli Lilly, and Omnicom.

FINSUM: This is a diverse list from across different sectors which includes a lot of companies with strong profiles. All of the stocks have of a dividend yield of at least 2.5%.

(Washington)

Advisors all over the country are wondering about a simple question—why the SEC did not use the word “fiduciary” in its new best interest rule. The answer to the question had remained obscure until this week, when SEC chairman Clayton answered it at a conference following a question by FINRA CEO Robert Cook. Clayton said that the new rule is “definitely a fiduciary principle, just like the fiduciary duty in the investment advisor space is a fiduciary principle”, but continuing that calling standards for both brokers and advisors “fiduciary” and “then defining them would not make it clear that the relationship models were different”.

FINSUM: So basically the SEC avoided using the word so as not to muddle the difference between the relationships of brokers to clients vis-a-vis advisors to clients.