(Washington)

Advisors across the country are nervous about how the fiduciary rule-best interest rule saga may play out. To be honest, the situation has been growing bleaker by the week: numerous states are issuing their own fiduciary rules while the SEC and DOL both rework their original rules. This all means there is a good deal of regulation yet to come. Today, there is more reason to be sullen, especially if you are on the east coast, as Maryland has just announced plans for its own fiduciary rule. “(Financial professionals) have a fiduciary responsibility, morally, to make sure that their advice is in your best interest, but that has not been the law," said Senator James Rosapepe of Maryland.

FINSUM: State-based fiduciary rules with no federal rule, or a lighter federal rule, is just about the worst situation possible, as it will create a spider’s web of confusing and overlapping regulation with many grey areas and loop holes.

(Miami)

FINSUM is at the Inside ETFs conference in Hollywood, FL this week, and we wanted to bring you a little live coverage. Yesterday, there was a major session at the event discussing the outlook for fixed income. The consensus was that even though the Fed has paused, there is now way to tell when rates may rise again. Further, while China’s economy looks weak right now, that could turn around rapidly in the event of a trade deal with the US. Finally, all of the five panelists discussing fixed income said the ”liquidity mismatch” between ETFs and fixed income instruments is overblown and that there is not nearly as much to worry about as some think.

FINSUM: Fixed income’s outlook is murky right now. On the one hand, the Fed has paused, but on the other, rates could start rising anytime. On balance, we do think the risk-reward is slightly in favor of a shorter-duration long position.

(New York)

Restaurants are an area that don’t get much attention in the media, but can be a place where investors can find alpha. With that in mind, we wanted to run some analyst picks that choose the best food stocks. The three names are Dunkin Brands, McDonalds, and Yum! Brands. The case for Dunkin is that though the company has underperformed a little lately, they are poised for a rebound, especially with the new branding of just “Dunkin”.

FINSUM: McDonalds is the most interesting pick for us, as we admire the changes and leadership of the CEO and think updating the menu and the physical restaurants has and will continue to be successful.

(New York)

High yield had a very bleak run to finish 2018. The asset class went over 40 days without a single sale as the junk credit market seized up. However, it has made a comeback in a major way. The first five weeks of 2019 saw a staggering 5.25% gain in the Bloomberg Barclays US Corporate High Yield Index. New issues were quite oversubscribed (more than double), and the general mood has completely shifted.

FINSUM: The Fed backing off on rates sure makes a difference! It is interesting the market reacted this sharply given that high yield is relatively more insulated from rates. In our view, the turnaround is largely a relief rally that the Fed won’t push the economy into a recession.

(New York)

Hate him or love him, you have definitely heard of him and may respect him. Paul Krugman is one of the most famous economists in the world, and he has just put out a warning we think investors need to hear. Krugman’s big fear is that trouble is building in the economy and the Fed doesn’t have much firepower to help stimulate things if and when growth heads backwards. “There seems to be an accumulation of smaller problems and the underlying backdrop is that we have no good policy response”. Krugman argues that hiking rates was never “grounded in the data” to start with and that “Continuing to raise rates was really looking like a bad idea”.

FINSUM: What we know is that a recession will come at some time, what we don’t know is when. Krugman has given sometime in the next two years as his timeline, which to us wreaks of a lack of confidence.