(Seattle)

Amazon has been hit hard lately. The company’s surprise earnings caught the market off guard, which led to a big tumble in the shares, with the stock dropping over 10%. However, that presents a good buying opportunity, says Barron’s. The market was nervous because of the slowdown in revenue growth, but according to one analyst “We believe revenue growth is becoming a less relevant metric for Amazon given the outsize growth of the company’s cloud and advertising businesses”.

FINSUM: Amazon is still a fast growing business, but it is becoming more mature, which means expanding margins are going to be a key metric to watch. That is an area the company is excelling in.

(New York)

Bloomberg is arguing that the world may be on the verge of a big synchronized recession. In the words of the publication, there is “risk of synchronized slowdown in global growth as Europe wobbles, China sputters and stock markets around the world keep crumbling”. China is finally feeling real heat from the tariffs of the trade war and European growth is slumping. That begs the question of how long the US can remain the fast-growing outlier.

FINSUM: Growth is still good in the US but it does seem to be past peak. Just not as far past peak as in the rest of the world.

(New York)

One of the most underappreciated areas of the bond market is in mortgage-backed securities. Anyone familiar with the Financial Crisis will instantly know why. However, the asset class itself offers many attractive advantages compared to other bonds. There are three main points of appeal: higher yields, liquidity, and low correlation to risk assets. MBS ETFs average 2.79% yields (much higher than Treasuries), have much greater liquidity than corporate bonds, and have the lowest correlation to risk assets of any fixed income instrument.

FINSUM: If you can get of the trauma that the acronym caused, MBS can be a very good asset class for many different market environments.

(Washington)

Here is an eye-opener for investors: one of the biggest market reactions to the midterms is likely to be in munis. In particular, yields on munis are expected to fall is the Democrats take the House, which would result in a split Congress. The reason why is that such an outcome would likely limit the further possible damage that could be wrought by Republican tax proposals. However, since the market is anticipating this outcome, if Republicans do maintain their hold on the House and Senate, then yields could rise sharply. The call on the moves comes from Barclays.

FINSUM: The most likely outcome right now seems to be a blue House and a Red Senate, which would mean smooth sailing and likely gains for munis.

(New York)

Wall Street is getting behind the stock market in a way that is atypical for the current environment. Following a big fall in stocks, banks and analysts usually get shy about calling a rally and generally stay neutral or call for further losses. However, following the best two consecutive trading days since February, they are getting behind stocks with unusual vigor. For instance, JP Morgan’s all-world analyst said that the “rolling bear market” might turn into a “rolling squeeze higher” and that “the potential for a violent upside rally is substantial”.

FINSUM: We are not as optimistic as Wall Street, but certainly don’t feel gloomy about the market given the strength of earnings and the economy.