Retail drives S&P 500, Nasdaq to record highs | VIX may be vulnerable to manipulation, researchers say | Fed minutes hint at asset reduction
May 26, 2017
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Retail drives S&P 500, Nasdaq to record highs
Disregarding soft economic data and political upheaval in Washington, D.C., investors drove the Standard & Poor's 500 index and the Nasdaq composite to record highs Thursday morning. The consumer discretionary sector and strong figures from Best Buy and other retailers drove the gains.
Reuters (5/25),  Financial Times (tiered subscription model) (5/25) 
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Industry Update
VIX may be vulnerable to manipulation, researchers say
Traders may be attempting to manipulate the Chicago Board Options Exchange's Volatility Index by moving around Standard & Poor's 500 index options prices, according to University of Texas at Austin researchers. "This market is fairly unique because you've got a very liquid market that's settling based on the price of a less liquid options market," said John Griffin, one of the researchers.
The Wall Street Journal (tiered subscription model) (5/25) 
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Fed minutes hint at asset reduction
The Federal Open Market Committee has outlined a plan to reduce the Federal Reserve's $4.5 trillion balance sheet, including gradual tapering of mortgage-backed securities. JPMorgan Chase economist Michael Feroli says the process could start as early as September.
Reuters (5/25),  Financial Times (tiered subscription model) (5/25) 
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Tech bubble concerns emerge
The Standard & Poor's 500 index rose almost 8% this year, driven largely by technology shares. The concern is whether investors are jumping into a momentum play, causing a tech bubble.
Financial Times (tiered subscription model) (5/25) 
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Mnuchin supports muni bond tax exemption
Treasury Secretary Steven Mnuchin indicated the Trump administration's intention to continue a municipal bond tax exemption at a Senate Finance Committee hearing on the fiscal 2018 budget and tax reform. "Our preference is strongly to keep the interest deductibility of state and local bonds," Mnuchin said.
The Bond Buyer (subscription required) (5/25) 
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Wells Fargo fills rivals' signing-bonus void
Wells Fargo Advisors is increasing spending on signing bonuses to attract veteran brokers, while UBS, Merrill Lynch and Morgan Stanley are cutting recruitment budgets. Wells Fargo's adviser head count dropped 3% in the first quarter.
InvestmentNews (tiered subscription model) (5/25),  The Wall Street Journal (tiered subscription model) (5/25) 
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Extension of production cut drives oil prices down 5%
Investors were disappointed by the extension of oil production curbs from OPEC and other producing nations, causing prices to fall 5% Thursday. "Today the bottom evaporated from the market," said Robert Yawger of Mizuho Americas.
Reuters (5/25),  Bloomberg (5/26),  The Wall Street Journal (tiered subscription model) (5/25),  Financial Times (tiered subscription model) (5/25) 
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BlackRock: ETFs transforming active management
Investors are increasingly turning to indexed ETFs to pursue active objectives. Institutions are using ETFs to construct portfolios, fine-tune risk, and improve operational tasks like cash management and portfolio transitions.
Learn more in BlackRock's ETF Desk Reference.
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New York Focus
N.Y.'s Mall at the Source, Fortunoff sold for $92M
Long Island, N.Y.'s Mall at the Source and the adjoining Fortunoff Building have been sold for $92 million. The 723,300-square-foot open-air shopping center was unencumbered and sold to an undisclosed foreign investor.
Commercial Property Executive (5/25) 
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People & Personalities
Liquidnet CEO Merrin discusses AI, blockchain
Liquidnet CEO Seth Merrin says his mission to make markets more efficient continues as the firm explores artificial intelligence and blockchain technology. "Most blockchain companies will not succeed, but I believe blockchain is a wonderful technology and architecture," Merrin says.
The Trade (UK) (5/25) 
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Financial Products
Annuity options increase as fiduciary rule looms
Some annuity providers have introduced fixed-rate deferred annuities with income riders as the effective date nears for the Labor Department's fiduciary rule. The products give distributors a way to keep selling income guarantees under the rule's best-interest contract exemption.
InvestmentNews (tiered subscription model) (5/25) 
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NYSSA News
Ben Graham Value Conference IV
Join us Tuesday, June 20 for Ben Graham Value Conference IV as we celebrate NYSSA's 80th anniversary and honor the legacy of NYSSA's founder, Warren Buffett's mentor and the man renowned as the "Father of Value Investing," Benjamin Graham. This is an all-day conference held at Fordham University. Learn more about this event.
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High Yield Bond Master Class & 27th Annual High Yield Bond Conference
Join us at our High Yield conference that we have been running at NYSSA for 27 years in a row! This is a two-day conference that is taking a place at NYSSA Conference Center on June 21 and 22. Learn more about this event.
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Editor's Note
SmartBrief will not publish Monday
In observance of Memorial Day in the US, SmartBrief will not publish Monday. Publication will resume Tuesday.
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