(New York)

The economic picture is growing increasingly gloomy for the US. While there has been sporadically good data, the general trend is downward across many areas. Today, more information on the labor market is signaling a further deterioration. ADP hiring data has been released and it shows that sector hiring has fallen to an 18-month low. The private sector hired 129,000 new workers, missing expectations. “The job market is weakening”, says Moody’s Analytics, bluntly.

FINSUM: The job market seems like a good leading indicator right now. Company’s may be tightening purse strings, which could be a sign that everything is slowing.

(New York)

The fiduciary rule’s journey has been a seemingly endless saga. Opponents of the rule thought they had finally defeated it when the fifth circuit court ruled against it last year. However, its path is far from over and is showing an interesting parallel: marijuana. Fierce proponents of cannabis legalization have taken a different tact after a federal level push failed—they have gone to the state level. As most will have noticed, marijuana has been legalized in many states as part of a grassroots push for cannabis. The fiduciary rule is now playing out the same way, as new state-level rules have been popping up all over the country, threatening to bring patch work regulation.

FINSUM: One would not naturally think to compare the fiduciary rule and marijuana, but the regulatory path for both is looking quite similar. This would not be a good outcome for broker-dealers.

(New York)

Gold is an interesting asset class right now. Everyone knows it has been in the doldrums for many years, but with recession fears brewing, and rates falling, the outlook is an interesting one. Goldman Sachs thinks gold is headed higher. Their thesis is that late cycle worries and falling rates will combine to push up the shiny metal. Falling rates will weaken the Dollar, further helping overseas buyers purchase gold.

FINSUM: In general, we like this thesis. However, we think gold would do better if there was more worry about a huge downturn/crisis, which there doesn’t seem to be. Fears right now are about a standard recession, which would help gold, but maybe not be ultra bullish.

(New York)

In another sign of a weakening economic landscape, new retail sales data was released for February, and it was not pretty. The data didn’t just slow, it actually reversed, with retail sales falling 0.2% month over month in February. The data was a big shock as economists were expecting a gain, especially after a revised 0.7% increase in January. The numbers suggest the economy may be in line for a contraction in Q1, as December also saw a big 1.6% decline in retail sales.

FINSUM: There are a lot of economic indicators looking negative right now. We are still optimistic, but the signs are getting harder to ignore.

(New York)

We wanted to write an article about a new fund we discovered in our regular course of business, but that got us excited. One of our gripes with ETFs is that there always seems to be a dearth of ways to express short-term tactical opportunities, or own a fund that does so. That is why we were excited to find a fund in New York Life’s IndexIQ ETF lineup. The fund, the IQ Merger Arbitrage ETF (MNA), seeks to gain capital appreciation by buying companies that have had public takeover announcements. The fund also includes a short on global equities as a partial hedge. Merger arbitrage is a common hedge fund strategy.

FINSUM: This is one of those area where we often wish we had exposure, but don’t have the time to actually enact a strategy, so this IndexIQ fund is very useful. The fund has a 75 basis point expense ratio.