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The Fate of the World's Largest ETF Is Tied to 11 Random Millennials
August 8, 2019--A wonky structure pegs the fund's future to their mortality
Most of those named in the ETF's documents were not aware
The fate of the world's largest exchange'traded fund rests on the health of a group of twenty-somethings.
Thanks to a quirk in the legal structure used to set up the SPDR S&P 500 ETF Trust, known as SPY, more than $250 billion rests on the longevity of 11 ordinary kids born between May 1990 and January 1993.
Those children are now carving out careers in public relations, restaurants and sales, spread around the country from Boston and Philadelphia to Alabama and Utah. But none of the eight spoken to by Bloomberg News was aware of their role in investing history.
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Source: bloomberg.com
CBO-Monthly Budget Review for July 2019
August 7, 2019--The federal budget deficit was $867 billion for the first 10 months of fiscal year 2019, the Congressional Budget Office estimates-$184 billion more than the deficit recorded during the same period last year. Revenues were $92 billion higher and outlays were $276 billion higher than in the same period in fiscal year 2018.
However, outlays in the first 10 months of last year were reduced by shifts in the timing of certain payments. If not for those shifts, the deficit for that period would have been $44 billion greater, and the increase in the deficit so far this year would have been $140 billion rather than $184 billion.
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Source: Congressional Budget Office (CBO)
Canada's Housing Market Slowdown
August 7, 2019-Following a period of escalating prices, Canada's housing market is cooling. Measures designed to strengthen financial stability such as more stringent tests of borrowers' ability to repay their loans, along with higher interest rates, combined to make mortgage financing more expensive.
As a result, residential mortgage credit slowed to just 3.4 percent annual growth in December 2018.
Nationwide, house prices are 2.5 percent lower than the peak in mid-2018. This week's chart of the week shows that prices in most major cities have stabilized. In Toronto and Vancouver, declines in house prices reduced speculative "froth" but prices remain overvalued.
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Source: IMF
How pension funds are reacting to negative bond yields
August 4, 2019--Fed interest rate cuts raise prospect of a bigger push into riskier assets
A quarter of the bonds issued by governments and companies worldwide are currently trading at negative yields-which means that $14tn of outstanding debt is being paid for by creditors in a bizarre reversal of normal practice.
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Source: FT.com
CB0-Inflation, Inflation Expectations, and the Phillips Curve: Working Paper 2019-07
August 2, 2019--Summary
This paper studies the current state of inflation dynamics through the lens of the Phillips curve and assesses the degree of anchoring of inflation expectations.
I first estimate a Phillips curve model with both past inflation and a constant anchor as explanatory variables over the 1999-2018 period for a variety of measures of consumer prices.
My results show that the Phillips curve has shifted away from an accelerationist form toward a level form, but that shift is incomplete, particularly for core inflation. I then turn to survey measures of professional forecasters' and consumers' inflation expectations and assess the degree to which those expectations are anchored. My analysis shows that although professional forecasters' expectations have been well anchored, consumers' expectations have not. Further analysis using multiple empirical measures of inflation expectations suggests that in the context of the Phillips curve, consumers' expectations have generally outperformed professional forecasters' expectations in terms of explaining and forecasting the dynamics of inflation over the past two decades.
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Source: Congressional Budget Office (CBO)
Fed cuts interest rates for first time since financial crisis
July 31, 2019--The Federal Reserve announced Wednesday that it would cut interest rates for the first time since the 2008 financial crisis in a bid to protect the U.S. economy from a global downturn.
In a statement following a two-day meeting in Washington, the central bank's Federal Open Markets Committee (FOMC) announced it would cut its baseline interest rate range to 2-2.25 percent, a 0.25 percentage-point cut.
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Source: thehill.com
US passive-active funds split to reach parity by 2025
July 29, 2019-- Total assets invested in US mutual funds, a definition that includes exchange traded funds, will hit $26.8tn that year, the accounting firm said.
This date, however, is significantly later than an estimate by Moody's Investors Service.
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Source: FT.com
IMF Outlook for Latin America and the Caribbean: A Stalling Recovery
July 29, 2019--Economic activity in Latin America and the Caribbean remains sluggish. Real GDP is expected to grow by 0.6 percent in 2019-—the slowest rate since 2016-before rising to 2.3 percent in 2020.
The weak momentum reflects negative surprises in the first half of 2019, elevated domestic policy uncertainty in some large economies, heightened US-China trade tensions, and somewhat lower global growth.
Slower growth
Sluggish activity in the first half of this year largely reflects temporary factors, including adverse weather conditions that reduced mining output in Chile and agricultural output in Paraguay. Mining activity in Brazil moderated following the Brumadinho Dam disaster, while growth in Mexico weakened due to an under execution of the budget, labor strikes, and fuel shortages.
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Source: IMF
'Sin stock' ETFs strive to make good on returns
July 29, 2019--Like the underlying assets, returns on vice or virtuous investments are not guaranteed
There is a handful of exchange traded funds they can use to invest in these so-called sin stocks-but the wages of sin are still a matter of debate.
The only broad-based sin stock ETF on the market is the AdvisorShares Vice ETF, according to Morningstar data.
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Source: FT.com
Citi to Cut Hundreds of Trading Jobs in Bad Sign for Wall Street
July 29, 2019--Growing list of firms are firing as trading revenue falls anew
'The rest of Wall Street is thinking the same way,' Harte says
Citigroup Inc. is preparing to cut hundreds of jobs in its trading division--stark new evidence that an industrywide slump in revenue this year may be more permanent than the tweets and policy moves rattling clients.
The New York-based bank plans to slash jobs across its fixed-income and stock-trading operations over the course of 2019, according to people familiar with the matter.
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Source: Bloomberg