Early Bird Headlines 12 August 2015
Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
- Risky assets reel as China lets yuan fall for a second day (Reuters) Asian stocks and emerging market currencies tumbled on Wednesday and commodities fell after China let the yuan fall sharply for a second straight day, forcing investors to seek refuge in safe-haven government debt. See more under China, below.
- Industry reps warn DOL fiduciary rule will gut retirement advice (Employee Benefit Advisor) The U.S. Dept. of Labor (DOL) is holding hearings on its proposed “Fiduciary Rule” which would hold those offering advice on investment choices in 401(k) and similar retirement plans to offer only advice in the best interest of the investor. Heretofore such “advisors” have been held only to a “Suitability Standard” which requires only that recommendations be generally suitable for people in the general class to which the investor belongs. An example of the difference is that if the choice is between two very similarly constituted funds, one with a 0.2% annual fee structure and the other with a 1% annual fee structure (with the registered rep receiving half of the fees), only the low fee fund satisfies the Fiduciary Standard, while either satisfies the Suitability Standard. This creates a conflict of interest for the advisor without the Fiduciary Standard.
In testimony before the DOL Of the many industry critiques of the Department of Labor’s fiduciary proposal, one of the most oft-repeated is the assertion that new regulations would cut off access to advice for low- and middle income investors – precisely the segment of consumers the initiative aims to protect. Industry representatives insist that if the rules take effect, brokers will be compelled to abandon the commission model, and with it the millions of low-end retirement investors and plans that wouldn’t meet the minimum asset levels for fee-based accounts. Econintersect: The ethical standards of the Suitability Standard process require that any fees paid for an investment be disclosed by the registered rep “making the sale”, and specifically what portion of those fees returns as compensation to the “salesman”. The implication of the industry testimony is that in many cases the cost load of an investment chosen is not revealed in specific detail and furthermore the “advisor” is only serving the low-end retirement investors because he (the advisor) can obtain a return at the expense of the investor that he could not if the cost to the investor were revealed.
- Navajo Nation declares state of emergency over ‘tragic’ spill (Al Jazeera) The toxic mining waste that turned the Animas River orange after mismanagement of an abandoned mine by the EPA (Environmental Protection Agency) could be trouble for farmers and ranchers in Navajo Nation. The southern Colorado river running south out of the San Juan Mountains and into the San Juan River which flows into New Mexico was flooded with about 3 million gallons of metal based poisons late last week. The states of Colorado and New Mexico have also declared states of emergency.
- Nefertiti ‘was buried inside King Tut’s tomb’ (BBC News) If researchers can confirm the discovery, one of the great archaeological finds ever has been made. Nefertiti, the former queen of Egypt, has never had her remains located but now they may be located in a through a portal in King Tut’s tomb. Tutankhamen is believed to have been Nefertiti’s son.
- Where algebra was invented (BBC News) With a history stretching back more than 2,000 years, the Uzbekistani city of Khiva is a bustling oasis packed full of exquisite architecture from its Silk Road heyday. Absolutely fabulous pictures here.
- China July factory output up 6 percent year on year, well below forecast (Reuters) China’s factory output rose 6.0% in July from a year earlier, missing market forecasts and reinforcing expectations that the economy is in need of fresh stimulus to prevent a deeper slowdown. Expectations had been for 6.6% – June had an increase of 6.8%.
- (What’s Left of) Our Economy: Why China’s Devaluation is a Huge, and Very Dangerous, Deal (Reality Check) The currency move is, according to this analysis is pure trade protectionism and is not an attempt to improve competitiveness. That may seem a difference without a distinction but the author very carefully explains the details of his logic. Bottom line, it is seen here as an attempt to boost market share by the country that is already the elephant in the global trading room.
- Renminbi falls to 4-year low after devaluation (Financial Times) The renminbi fell sharply again on Wednesday, taking it to a new four-year low against the US dollar in offshore markets and fueling expectations of sustained weakness in the Chinese currency.
- USD/CNY – US Dollar Chinese yuan (Investing.com) Another day, another 1.6% lower. If this were done for 10-12 days the entire devaluation of the euro vs the yuan renminbi over the past 16 months would be reversed.
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