(New York)

The junk bond market may be coming back from the dead. The “December doughnut”, as it is being called, is now in the past, and the frozen market finally thawed this week with the first new junk bond sale since November. The market had gone 41 days without a sale until Tuesday, when $4 bn of new issuance went through.

FINSUM: A 41-day freeze and then 4 sales in one day totaling over $4bn. Demand was so high the companies were able to raise more than expected. Maybe the worst is behind the high yield market?

(Seattle)

Are you looking to find a good investment thesis for Amazon? Look no further than their growing private label business, which could prove a catalyst for expanding margins and share price growth. According to an analyst at Suntrust Robinson Humphrey, “The rise of private labels and exclusives is one of the least understood/most under-appreciated trends within Amazon”. He continued, “This strategy should strengthen the flywheel effect of proprietary offerings/better user experience/higher retention/spend/share gain, and should prove accretive to margins over time”. The profit margins on own-branded products are 7-15% higher than on other branded products.

FINSUM: Because of their huge user base, Amazon is in a good position to benefit from selling their own brand, as they have a ready audience. This will likely improve overall margins as the business expands.

(Houston)

With all the volatility in stocks and bonds over the last few months, oil hasn’t gotten much attention. Drivers will have noticed gas is cheap right now, as oil prices have fallen considerably over the last several months. But will it stay that way? Right now the IEA is forecasting solid global demand growth in 2019, which should keep prices strong, but that forecast is vulnerable to some big swings. The IEA warns that since the signals from the global economy are not strong, the forecast could have some considerable downside.

FINSUM: Oil will probably dance to the music of the economy this year. It does not seem to be a significant leading indicator at the moment.

(New York)

Markets are doing well this year, but there is a lot for investors to worry about. Aside from the current ongoing shutdown, there is a debt ceiling deadline on March 1st (which is sure to be another political nightmare, and may yet intersect with the shutdown), a deadline for a Chinese trade deal, and a scheduled Brexit on March 29th. That is a lot of potential crises on the calendar. However, valuations have fallen considerably alongside share price falls and P/E declines, and the market seems to be regaining its optimistic footing. Corporate earnings look to stay strong in 2019, which will help support the market.

FINSUM: There are a lot of analysts who think this is a bear market bounce, and many others who think the worst is behind us. We are starting to side with the optimists.

(New York)

One of the big themes in the asset management industry right now is the possibility of consolidation. A big plunge in asset manager share prices and falling fees has added motivation for managers to tie up to increase scale and efficiency. Invesco’s recent deal to acquire OppenheimerFunds is a great example. However, regulators are reporting discussing such deals and are apparently concluding that the passive management business has grown uncompetitive, with just three firms dominating the space. Interestingly, the worries over competitiveness are not centered on the asset management industry itself, but rather how having a few large managers, each of whom own each other and other companies’ shares, makes the whole economy less competitive. The big three asset managers—BlackRock, Vanguard, and State Street, are not the largest shareholders in 88% of S&P 500 companies. This whole situation, and the worries attached to it are referred to as “common ownership”.

FINSUM: One can see how this would make the economy less competitive, but more specifically, it may mean that it is harder for asset managers to push deals through.