(Seattle)

Amazon as a company has been nothing but an unmitigated success. But while the business on the whole has been stellar, there have been missteps, such as the venture into smartphones. But where will Amazon’s next big shot in the arm come from? Bloomberg says it is going to be in healthcare. The company is teaming up with JP Morgan and Berkshire Hathaway to make healthcare more affordable for their employees, and eventually all Americans. Bloomberg summarizes Amazon’s potential to transform healthcare best, saying “Amazon’s e-commerce operation could be used to send medication direct to patient’s homes, saving them trips to a pharmacy. Its cloud-computing division can store patient health-care records so they can be easily accessed by doctors anywhere. And its payments system could be used to automate payments with health-care providers.”

FINSUM: Say what you want from a returns perspective, but from a consumer perspective the US healthcare system is decidedly broken. Hopefully, this sort of initiative will eventually turn it around.

(New York)

Any financial advisor will tell you that most of their clients love muni bonds. The asset class has been very popular for many years among the wealthy because of the bonds’ tax exempt status. Therefore, advisors need to pay attention, as there is a little discussed, but very real ticking time bomb in the asset class. That big time bomb is unfunded pension liabilities. The projections made fifteen years ago may have been plausible, but with a financial crisis and then years of rock bottom rates, many think state and local pensions have reached a point of no return which will lead to major defaults. Barclays’ munis team recently noted “We are increasingly wary of high pension exposure, especially among state and local credits”, continuing that “short-term investment gains won’t be sufficient to plug liability gaps”.

FINSUM: There is bound to be a big wave of defaults in the muni space. This is a big and slow-moving crisis that nobody, especially the federal government, wants to deal with.

(New York)

Well it finally happened yesterday. The big selloff in bonds finally managed to legitimately spook the equity market. Stocks in the US were down big as the yield on ten-years jumped mightily. The ten-year yield is now 2.73%, the highest in three years, which was a significant mental threshold. Investors are worried that with the world economy doing so well, inflation may again rear its head, causing central banks to raise rates quickly. The S&P 500 fell 0.7% on Monday.

FINSUM: Okay here is the big question we have—why would the world economy doing well and higher rates be negative for stocks? If anything, equities are a good inflation hedge.

(Washington)

This week’s news has been rife with articles on President Trump and his apparent push to try to firm special counsel Mueller over the summer. Now Bloomberg has put out an article commenting on the implication of such an effort (if it is true). In a balanced view, Bloomberg says that such behavior, even if true, would not add to any obstruction of justice case against Trump, and that any problems it would cause would be on the political side, not the legal one.

FINSUM: To be honest, we are perplexed by the firestorm over this. Trump did not have Mueller fired. Simply looking into it, even if true, doesn’t seem to constitute anything.

(New York)

If behavioral finance has taught us one thing, it is that losses hurt the human mind more than gains help it, and that truth might be behind why the market has been so resilient over the last year. Despite major turmoil in domestic and international politics, stocks have been rock steady and very strong, with many consistently “buying the dip”. Well Barron’s argues the reason for this behavior, and in turn, why the market has done so well, has to do with this concept—that investors have so many gains from past years that they feel like they are “playing with house money”, or that they have little to lose because they are only risking gains.

FINSUM: Evidently, research suggests that people are more likely to take risks with capital they consider “house money” than with their own money, which could explain the almost inexhaustible “buy the dip” mentality.