FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
An ex-JP Morgan adviser admitted to stealing $US22 million from clients for gambling and other expenses (WSJ)
Michael Oppenheim, a former JP Morgan Chase investment advisor, admitted to stealing approximately $US22 million of his clients’ money in order to pay off home loans and bills, to gamble, and to pay back other investors. A sentencing hearing is scheduled for February, reports the WSJ’s Anna Prior.
His lawyer “said that compulsive gambling was at the root of the case but declined to elaborate. He noted that Mr. Oppenheim’s last words to the judge were, ‘I wish I’d been caught earlier,'” writes Prior.
Investors are worrying about the rate hike way too much (Morningstar)
“I don’t think a 25-basis-point change really changes much one way or another,” argues Morningstar’s Matt Coffina.
“Certainly, rates do affect the fair values of stocks, so you have direct effects–for example, your interest expense tends to go up with a higher interest rate. But then more importantly, you have indirect effects, such as your cost of equity also tending to go up. Investors demand a higher return, bonds become relatively more attractive, and so to invest in stocks, you need to be compensated even more so than before. Again, I don’t think a 25-basis-point change makes a difference, but investors are worried about where rates are going over the long run and, more importantly, what this means for investor sentiment and how investors are going to see stocks relative to their alternatives,” he said.
Proposed new laws would require firms to report the abuse of seniors (Financial Advisor Magazine)
New proposed laws, designed in response to the large number of financial exploitation cases in recent years, would require firms to report on and prevent the abuse of seniors. They will reportedly make reporting abuse easier and will delay disbursement of funds in exploitative cases.
“State eldercare officials want more cooperation from financial firms in identifying victims and their assets. At the same time, financial institutions worry about violating privacy provisions in reporting abuse and hesitate to stop disbursements without court-ordered account freezes,” reports Dan Jamieson.
Here’s what investors should consider about the Fed rate hike (Charles Schwab)
Kathy A. Jones lists two scenarios that investors should think about regarding the looming rate hike. First, if the Fed’s timing is right and inflation is about to increase, she writes that Charles Schwab analysts see two possible outcomes: 1) some steepening of the yield curve as interest rates rise, and 2) narrowing credit spreads as corporate bonds outperform Treasures.
On the flip side, if the “Fed’s timing is seen to be early and the inflation threat isn’t credible, we see the possibility of two different outcomes: 1) A flatter yield curve as the Fed hikes rates, [and] 2) widening credit spreads on concerns that tighter monetary policy would add stress on borrowers in a slow-growth, low-inflation world,” writes Jones.
The fall in energy prices continues shape the larger economic story (Advisor Perspectives)
“The fall in energy and commodity prices continues to drive the divergent economic trends in the U.S. and other countries in the region. While the low fuel costs have supported the ongoing healthy U.S. economic expansion, the resource exporting countries in the region continue to struggle,” writes the Thomas White International team.
For example, “Brazil remains in an economic recession even as political controversies have worsened the outlook for the country. The recent downgrades by the credit rating agencies have led to significant capital outflows from Brazil, making it difficult for domestic corporations to finance growth.”
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