(Seattle)

The hype over Amazon’s pending second headquarters is making quite a splash, and not just at the local level or in the media. Several investment funds, large and small, are or will deploy significant capital in trying to chase the real estate returns that seem likely to accompany the new location. Amazon says the new headquarters will employ 50,000 people over the next two decades, and existing tech-focused cities have seen huge gains in real estate on the back of the highly paid work force. Accordingly, several funds are being established to quickly buy real estate in the city that wins the new headquarters.

FINSUM: Buying real estate in the winning city seems like a very good long-term bet. We wonder how locals in these “finalist” cities are feeling given the upside and downside of Amazon coming.

(New York)

The stock market has been given a lot of time to adjust to the midterm elections and their likely outcome. Most think Democrats will take back the House, while Republicans will hold the Senate. So what is the market saying about how different sectors will perform in that scenario? The answer is that stocks in the defense and infrastructure space are doing well, as most don’t see a fiscal tightening. Infrastructure spending is also seen as a bipartisan issue. Pharmaceutical companies are also benefitting as a split congress would be less likely to pass legislation to lower drug prices. Stocks impacted by trade tensions have continued to suffer as no one sees a bright outcome on that front.

FINSUM: So the market’s assumption are showing through, but that heightens the risk of what happens if the election does not go to plan. For instance, what happens to pharma prices if the Democrats sweep?

(Washington)

In what arrives as fairly shocking and quite alarming news, the DOL rule is coming back. After being effectively killed seven months ago, the DOL rule had all but disappeared. However, in an unpredictable turn of events, the DOL has announced it is working on a new version of the rule that will be debuted in 2019. The DOL released in its fall agenda that is was working on an updated rule in light of the 5th circuit court’s ruling, and that this would be debuted in Fall 2019. One prominent industry lawyer comments that “With both DOL and the SEC working on investor protection rules (and with both agencies targeting the same deadline), this hints that the two agencies may be working together to develop coordinated rules to protect American savers”.

FINSUM: A new DOL rule? Just when everyone thought we were past it! We expect this will be a toned down rule compared to the first version, however.

(New York)

Investors have gotten so used to low inflation that it is sometimes hard to imagine seeing it rise. However, Morgan Stanley is warning that inflation is rising across the globe and investors need to keep an eye on it. In Europe, Asia, and the US, inflation has risen from 1.1% to 1.4%, and it is bound to move higher, according to Morgan Stanley’s chief global economist. Interestingly, MS argues that the Euro area and Japan will see a higher rise in inflation than the US.

FINSUM: If inflation rises more strongly in other developed markets than the US, will that lead to even more foreign buying of US bonds because yields in those locations are so much lower? In other words, will there be even more demand for US bonds?

(New York)

Inflation is rising across the globe, including in the US. Perhaps more pressingly, the Fed seems absolutely intent on hiking rates as the economy continues to perform very strongly. With that in mind, profiting from rising rates, or at least insulating one’s portfolio, needs to become a priority. Accordingly, here are some ETFs to help: iShares Floating Rate Bond ETF (FLOT), the SPDR Blmbg Barclays Inv Grd Flt Rt ETF (FLRN), the ProShares High Yield—Interest Rate Hdgd (HYHG), the SPDR Portfolio Short Term Corp Bd ETF (SPSB), and the Vanguard Short-Term Corporate Bond ETF (VCSH).

FINSUM: The ProShares fund seems the most interesting of the lot as it invests in high yield bonds while shorting Treasuries to protect against rate hikes, all while delivering less rate sensitivity than regular short-term bonds.