FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
It looks like HFT was responsible for Monday’s market plunge (Investment News)
Paul Schatz, president of Heritage Capital, says Monday’s stock market plunge looked a lot like the May 2010 flash crash. In an article for Investment News Schatz wrote, “I believe that high-frequency trading was responsible, not for the whole stock market decline, but for the quick acceleration and pricing dislocations or anomalies.” He continued, “Remember, HFT thrives when markets are volatile and liquid. Not so much in quiet and less volatile markets.” Schatz points to the big declines in the value of healthcare and biotech ETFs despite their largest holdings being some of the most liquid names in their respective industries as evidence of a HFT-driven flash crash.
Ray Dalio says the Fed’s next move is QE4 (Business Insider)
Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, thinks the Fed’s next policy move won’t be to raise interest rates. Instead, Dalio believes the central bank will embark on a new quantitative easing program. Dalio thinks “it should now be apparent that the risks of deflationary contractions are increasing relative to the risks of inflationary expansion because of these secular forces.” He continued, “Our risk is that they could be so committed to their highly advertised tightening path that it will be difficult for them to change to a significantly easier path if that should be required.”
The top advisor concerns (Eaton Vance)
Investment Management firm Eaton Vance surveyed 1,006 financial advisors about their biggest market concerns. The survey found advisors are most worried about market volatility, preparing for the possibility of rising interest rates and generating income in a low-return environment. Interestingly, 87% of advisors noted at least some of their clients were wary of equities.
Schwab fined $US2 million for net capital deficiencies (Think Advisor)
Charles Schwab was fined $US2 million by the Financial Industry Regulatory Agency for net capital deficiencies. Think Advisor reports, “The deficiencies arose because on each of those dates, Schwab had inflows of cash that exceeded the amounts it could invest with existing facilities, so instead, Schwab transferred $US1 billion to its parent company for overnight investment,” according to FINRA. Schwab says the transfer occurred because it was trying to avoid keeping too much cash at one institution and that the money was always safely with the company’s parent. Schwab self-reported the matter, according to the settlement.
Savant Capital buys the Corcoran Group (Financial Advisor)
Savant Capital has agreed to buy the Corcoran Group, a firm catering to “high- to ultra-high-net-worth, senior-level corporate executives for publicly traded and private equity companies,” according to Financial Advisor. The acquisition brings another $US4.5 billion AUM to Savant Capital, which has offices in 11 states. Terms were not disclosed.
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