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If the U.S. Is in a Recession, It's a Very Strange One
July 4, 2022--Economic output is down but the job market is strong, unlike in previous recessions
The U.S. economy has experienced 12 recessions since World War II, and each one included two features: Economic output contracted and unemployment rose.
Today, something highly unusual is happening
Economic output fell in the first quarter and signs suggest it did so again in the second. Yet the job market showed little sign of faltering during the first half of the year. The jobless rate fell from 4% last December to 3.6% in May.
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Source: wsj.com
IMF Working Paper-From Polluting to Green Jobs: A Seamless Transition in the U.S.?
July 1, 2022--Summary:
What are the implications of the needed climate transition for the potential reallocation of the U.S. labor force? This paper dissects green and polluting jobs in the United States across local labor markets, industries and at the household-level. We find that geography alone is not a major impediment, but green jobs tend to be systematically different than those that are either neutral or in carbon-emitting industries.
Transitioning out of pollution-intensive jobs into green jobs may thus pose some challenges. However, there is a wage premium for green-intensive jobs which should encourage such transitions. To gain further insights into the impending green transition, this paper also studies the impact of the Clean Air Act. We find that the imposition of the Act caused workers to shift from pollution-intensive to greener industries, but overall employment was not affected.
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Source: imf.org
Existential Crisis in Bonds Fuels Wall Street's Income ETF Boom
July 1, 2022--Wave of payout-focused ETFs on way as bond volatility builds
Skeptics warn new funds simply increase equity-risk exposure
In an inflation-lashed world where bonds are posting record losses, Wall Street issuers are betting investors hungry for income will instead lavish their millions on ETFs that ride stocks in order to deliver payouts.
At least four issuers have filed plans for so-called income exchange-traded funds in the past few weeks, while three more such products have started trading in the same period. The vehicles target a steady stream of income using a range of equity-based strategies, like buying dividend-paying companies or selling call options on the S&P 500.
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Source: bloomberg.com
BondBloxx Launches Duration-Focused Emerging Market Fund in Response to Rising Interest Rates
June 30, 2022--BondBloxx Investment Management announced the launch of the BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF (XEMD), which begins trading today on CBOE. The fund tracks the J.P. Morgan EMBI Global Diversified Liquid 1-10 Year Maturity Index and includes US-denominated fixed-rate and floating-rate instruments with at least $1B in outstanding debt issued by sovereign and quasi-sovereign entities in index-eligible countries.
"As a truly novel product with a compelling risk / return profile, we believe XEMD is a valuable addition to the marketplace because it enables emerging market exposure while simultaneously addressing creeping duration risk1," said Paul Van Gilder, Investment Officer and Portfolio Manager, Municipal Employees' Retirement System (MERS) of Michigan. "As rates continue to rise, we think these kinds of tools will become even more critical."
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Source: BondBloxx
Inflation Protection ETF "CPII" Launches from Ionic Capital Management(R) LLC and Tidal ETF Services
June 29, 2022--The fund seeks to generate positive returns during periods of elevated inflation and rising interest rates
With the most recent inflation print at a 40-year high, Ionic Capital Management LLC (Ionic) in partnership with Tidal ETF Services, LLC (Tidal) launches the Ionic Inflation Protection ETF (NYSE: CPII). The actively managed fund seeks to generate positive returns during periods of elevated and/or rising inflation and inflation expectations as well as during periods of increasing interest rates and fixed income volatility.
"While the world has been in a deflationary environment for the past few decades, it now appears that period has ended. We have shifted to an inflationary environment that will persist at elevated levels even if current readings ultimately prove to be peak levels. It is critical that institutional and retail investors find ways to mitigate the destructive elements of sustained elevated inflation," says Doug Fincher, Portfolio Manager at Ionic."Now is the time to seek protection from the destruction of purchasing power caused by inflation."
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Source: Ionic Capital Management
Grayscale Sues SEC Over Bitcoin ETF Application Rejection
June 29, 2022--The SEC rejected Grayscale's application to convert its Grayscale Bitcoin Trust to an exchange-traded fund earlier Wednesday.
Grayscale Investments has sued the U.S. Securities and Exchange Commission (SEC) barely an hour after the regulatory agency rejected its application to convert its flagship Grayscale Bitcoin Trust product to an exchange-traded fund (ETF).
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Source: coindesk.com
New Xtrackers ETF puts U.S. equity investors on the net zero 'pathway'
June 28, 2022-- DWS, one of the world's leading asset managers, announced today the launch of a new Xtrackers exchange-traded fund (ETF). It provides large and mid-cap U.S. equity exposure aligned with an internationally recognized framework and is designed to capture the move of the global economy to a net zero emissions environment.
Xtrackers Net Zero Pathway Paris Aligned U.S. Equity ETF (NYSE Ticker: USNZ) listed today on the New York Stock Exchange and is designed to align with the objective of transforming economies to net zero. It provides exposure to a unique Paris Aligned Benchmark (PAB) index that uses a transparent set of rules that aim to be at the cutting edge of sustainable investment practices[1]. The index is designed to provide a 50% reduction in carbon intensity[2] versus a market capitalization weighted U.S. equity index[3], and a carbon intensity reduction trajectory of 7% year-on-year. I
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Source: dws.com
NightShares Launches the Only Family of ETFs Focused on the "Night Effect"
June 28, 2022---Founded by ETF industry veterans, NightShares funds are designed to capture the value from systematically buying at the close and selling at the open
The Night Effect has been identified in a large body of academic research as having the potential to offer attractive risk-adjusted returns and ETF investors have not had the ability to invest in just the Night Effect until now (1).
NightShares, a new entrant to the ETF space led by a highly experienced team that has built and grown multiple successful ETF brands, is today launching its first two ETFs: the NightShares 500 ETF (NSPY) and the NightShares 2000 ETF (NIWM).
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Source: NightShares
Smart beta ETF launches sink to 12-year low
June 28, 2022--Plain-vanilla strategic beta strategies are gathering the most assets, according to Morningstar
Factor-focused strategies may no longer be the exchange traded fund industry's shiny new thing. However, investors have not abandoned strategic beta ETFs with "plain vanilla" tilts and relatively low fees, Morningstar research shows.
Last year investors sank $131bn into strategic beta ETFs, which are focused on so-called investment factors such as momentum, minimum volatility, value and growth.
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Source: ft.com
IMF-United States of America: Concluding Statement of the 2022 Article IV Mission
June 24, 2022--A Strong Recovery from the Pandemic
The U.S. economy has staged a strong recovery from the COVID-19 shock. The positive effects of unprecedented policy stimulus, combined with the advantages of a highly flexible economy, have been clear. Just over two years after the COVID-19 shock, the unemployment rate and other measures of labor force underutilization have returned to end-2019 levels and output is close to its pre-pandemic trend.
Rapid wage increases for lower income workers have reduced income polarization, poverty fell to 9.1 percent in 2020 (from 11.8 percent in 2019), and there were even larger reductions in poverty for female-headed households, children, African Americans and Hispanics.
On net, 8.5 million jobs have been created since the end of 2020. There has, however, been a relatively slow recovery of labor force participation (reflecting a secular, demographic downtrend and early retirements) and there are important concerns around the potential longer run effects of the pandemic on education outcomes and productivity.
Over the past two years, U.S. financial institutions and corporates have been resilient, albeit with the aid of significant policy support. Stress tests show the banks to be very liquid and highly capitalized.
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Source: imf.org
