It is hard to believe the first quarter just ended. It was a quarter which saw stocks rise but one that also experienced an increase in uncertainty and volatility. President Trump was in no small part responsible for both the appreciation and the uncertainty. While his timeline has certainly changed, it appears his goals remain intact. We anticipate the economy will continue to grow modestly in the second quarter as gridlock in Congress takes hold.
There is quite a lot to talk about this week. I’ve mentioned the issues surrounding the Department of Labor’s Fiduciary Rule August 2015 and again November 2016. Without getting too far into the weeds, the Fiduciary Rule was originally proposed in 2010 as part of sweeping financial reforms. However, it was pulled from the bill and brought back in 2015. In essence, the fiduciary rule is about putting clients’ interests first. For clarity, Harvest Financial Advisors already abides by the fiduciary rule while the brokerage and insurance industry does not. Though this should not be a controversial topic, it gets to the heart of how brokers are compensated in the financial services industry. Upon taking office, President Trump ordered a review of the rule at the behest of the world’s largest asset managers who control America’s $16 trillion retirement industry. Among those are Blackrock and Vanguard, two of the largest and most trusted names in the industry, who are concerned the new rules “risk confusing investors and adding unnecessary costs for the financial industry.” I’ll let you draw your own conclusion.
Another topic that frequently comes up is automation and its impact on jobs. This is a theme I anticipate will grow in the years and decades ahead. Ford announced this week it will invest $1.2 billion to expand SUV and truck capacity at three separate Michigan plants. This is fantastic news and was quickly pushed by the White House as “making America great again.” However, reading a little further, one would notice that this rather large expenditure is expected to add or retain only 130 jobs. The moral of the story is automation could lead to greater productivity at the expense of labor.
So I’ve touched on regulation in the financial industry and jobs in manufacturing. The only thing left to discuss is climate change. This week Exxon Mobil urged President Trump to keep the United States in the 2015 Paris climate agreement, calling the accord “an effective framework for addressing the risks of climate change.” So what’s up with the world’s largest fossil fuel company pushing for climate change regulation? As with the financial industry above, it is important one considers the motivation. Exxon Mobil says in its letter that, “there are several reasons for the U.S. to stay in the Paris pact, including the opportunity to support greater use of natural gas, since it creates lower carbon emissions than coal when used for power generation.” You’ll never guess who has been investing heavily in natural gas the past few years.
And lastly, if you thought privacy was essentially dead, it is now officially dead. Both the House and the Senate voted this week to repeal regulations governing consumer privacy protection at Internet service providers. When the president signs this legislation, the repeal will allow service providers to sell consumer information including browsing history without customer consent. Major providers that will benefit from looser rules include AT&T, Comcast, and Charter Communication. Your web browsing patterns contain a treasure trove of data, including your health concerns, shopping habits and visits to personal sites. ISPs can find out where you bank, your political views, and sexual orientation simply based on the websites you visit. The fact that you’re looking at a website at all can also reveal when you’re at home and when you’re not. Welcome to the 21st century.
In closing, I came across a story about Fitbit for cows. Cows? It seems the tags which most cows have in their ears are going high tech. The new ear tags will monitor each cow’s heart rate, body temperature, and location. It will also store the animal’s date of birth and vaccination history. A rancher will be able to access this data using Bluetooth-enabled devices, essentially creating “smart cows.” Not unlike precise crop management, this will usher in the era of smart herd management. Now you know.
March 31, 2017