(New York)

The long-time biggest bond shop on Wall Street (actually they are in California) has just put out a stark warning to investors—ten-year Treasuries are going to hit 3.5% in the near term. The manager thinks yields will make it to that level this year but then stall. Above 3.5%, they say, yields would have a detrimental effect on growth and that as yields rise investors will be moving their money into different asset classes.

FINSUM: A 3.5% yield on the ten-year would be a pretty attractive proposition to many, and it seems likely that given how that figure would be simultaneously appealing and a warning of poor future growth, investors will likely move out of equities.

(Seattle)

How Amazon plans to use Whole Foods as part of its broader strategy is becoming clearer today. The company has announced that it will begin to offer significant discounts on hundreds of products, in addition to special offers, for Amazon Prime members who shop at Whole Foods. The company already has great Prime penetration of Whole Foods shoppers (75%), but less than 20% of Amazon Prime members shop at Whole Foods. The perks are a way to lure more Prime members into Whole Foods. The company seems likely to use the increased sales to offset any cost rises to its Prime service.

FINSUM: This seems like a good idea as the move will feed both its Prime business and Whole Foods.

(New York)

There have been a lot of fears over the supermarket sector over the last couple years. Especially since Amazon’s acquisition of Whole Foods last year, investors have been shy about grocery stocks and how that model may be disrupted. This has led to some steep discounts, but perhaps none is more attractive than Kroger. Despite fears, the grocer seems to have a solid position in the market, especially given that supermarkets are still consumers’ favorite channel. One market analyst says that “People are overly concerned about Amazon and groceries … The industry has faced disruption for 25 years, with companies like Costco Wholesale (COST) and Trader Joe’s, and it has been positive for Kroger. Disruption stirs things up and creates opportunities”. Kroger is currently the number two grocer in the US.

FINSUM: One of the very interesting things to note is that Amazon is now scaling back its grocery delivery business as consumers have not liked it as much as the click and collect services of Walmart and Kroger. Has grocery delivery died before it really began? Good news for traditional grocers.

(Washington)

US president Trump and North Korean leader Kim Jong Un have been planning a groundbreaking summit in the near future. The meeting has been touted for months as breakthrough in relations, especially following the friendly developments between North and South Korea recently. However, the whole meeting is now in doubt as North Korea has threatened to cancel. The country is angry over US-South Korea joint military training operations and does not want to be forced into a corner by the US over its nuclear program.

FINSUM: We are not foreign policy experts, but if the US wants to make progress with North Korea, we should make sure to keep them calm enough to meet with us. What happens thereafter is a separate decision.

(New York)

Over the last several years consumer credit markets have experienced a huge boom. As the economy started to pick up pace, consumers abandoned the deleveraging that characterized the Great Recession and started to use more credit. This led to a boom in profitability for credit card companies. However, that era has now come to an end. “The easy money has been made in card lending”, says a consumer finance analyst at Wells Fargo. Battles over ever lower rates for consumers as well as the cost of competing by offering rewards has challenged the landscape.

FINSUM: We definitely think the credit card boom as over as consumers have wisened up and have many more good options.