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CBO-Federal Debt and the Statutory Limit, February 2023
February 15, 2023--Summary
The debt limit-commonly called the debt ceiling-is the maximum amount of debt that the Department of the Treasury can issue to the public or to other federal agencies. The amount is set by law and has been increased or suspended over the years to allow for the additional borrowing needed to finance the government's operations. On December 16, 2021, lawmakers raised the debt limit by $2.5 trillion to a total of $31.4 trillion.
On January 19, 2023, that limit was reached, and the Treasury announced a "debt issuance suspension period" during which, under current law, it can take well-established "extraordinary measures" to borrow additional funds without breaching the debt ceiling.
The Congressional Budget Office projects that, if the debt limit remains unchanged, the government's ability to borrow using extraordinary measures will be exhausted between July and September 2023-that is, in the fourth quarter of the current fiscal year. The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from CBO's projections. In particular, income tax receipts in April could be more or less than CBO estimates. If those receipts fell short of estimated amounts-for example, if capital gains realizations in 2022 were smaller or if U.S. income growth slowed by more in early calendar year 2023 than CBO projected-the extraordinary measures could be exhausted sooner, and the Treasury could run out of funds before July.
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Source: CBO (Congressional Budget Office)
CBO-The Budget and Economic Outlook: 2023 to 2033
February 15, 2023--The Congressional Budget Office regularly publishes reports presenting its baseline projections of what the federal budget and the economy would look like in the current year and over the next 10 years if current laws governing taxes and spending generally remained unchanged.
This report is the latest in that series.
The Budget
CBO projects a federal budget deficit of $1.4 trillion for 2023. (Deficits and spending have been adjusted to exclude the effects of shifts that occur in the timing of certain payments when October 1 falls on a weekend.) In the agency's projections, deficits generally increase over the coming years; the shortfall in 2033 is $2.7 trillion. The deficit amounts to 5.3 percent of gross domestic product (GDP) in 2023, swells to 6.1 percent of GDP in 2024 and 2025, and then declines in the two years that follow. After 2027, deficits increase again, reaching 6.9 percent of GDP in 2033-a level exceeded only five times since 1946.
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Source: CBO (Congressional Budget Office)
SEC Proposes Enhanced Safeguarding Rule for Registered Investment Advisers
February 15, 2023--The Securities and Exchange Commission today proposed rule changes to enhance protections of customer assets managed by registered investment advisers. If adopted, the changes would amend and redesignate rule 206(4)-2, the Commission's custody rule, under the Investment Advisers Act of 1940 and amend certain related recordkeeping and reporting obligations.
The proposed rules would exercise Commission authority under section 411 of the Dodd-Frank Act by broadening the application of the current investment adviser custody rule beyond client funds and securities to include any client assets in an investment adviser's possession or when an investment adviser has authority to obtain possession of client assets. Like the current rule, the proposed rule would entrust safekeeping of client assets to qualified custodians, including, for example, certain banks or broker-dealers.
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Source: SEC.gov
SEC Finalizes Rules to Reduce Risks in Clearance and Settlement
February 15, 2023--Final rules will shorten process for settling securities transactions from two business days to one.
The Securities and Exchange Commission today adopted rule changes to shorten the standard settlement cycle for most broker-dealer transactions in securities from two business days after the trade date (T+2) to one (T+1). The final rule is designed to benefit investors and reduce the credit, market, and liquidity risks in securities transactions faced by market participants.
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Source: SEC.gov
Wall Street's Mutual Fund-to-ETF Magic Trick Is Failing to Wow
February 13, 2023--February 13, 2023--Many converted funds see outflows as ETFs overall lure cash
Quant giant Dimensional’s products are bucking the trend
A parade of money managers who converted mutual funds into exchange-traded funds in a bid to ride rampant demand for the newer, easier-to-trade structures are discovering it may not be so simple to tap the ETF boom.
More than one-third of converted funds have posted net outflows since they made the switch, according to data compiled by Bloomberg, while 61% have attracted less than $10 million each. In fact, only quant giant Dimensional Fund Advisors’s funds have seen significant positive net flows since converting. Even JPMorgan Asset Management, whose overall ETF business is booming, saw net outflows for its converted funds.
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Source: bloomberg.com
This Fund Might Just Be 'Stacked' in Your Favor
February 9, 2023--White-label issuer Tidal Financial Group continues to do what it does best: working with some of the brightest folks in the industry to bring truly innovative exchange-traded funds to market. This time they partnered with Newfound Research and Resolve Asset Management to launch the first of a series of what they call "Return Stacked ETFs".
Return Stacking?
Newfound Research principal Corey Hoffstein, and Rodrigo Gordillo from Resolve Asset Management authored a paper discussing return stacking in 2021 and have been actively discussing the strategy over the past year or so as evidenced by this podcast, and this video which, if you want to get into the weeds on this, I highly recommend.
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Source: realmoney.thestreet.com
Treasury Yield-Curve Inversion Reaches Deepest Level Since 1980s
February 9, 2023-- Two-year yield exceeded 10-year by as much as 86 basis points
Short-maturity yields track outlook for Fed's policy rate
US government bond investors pushed two-year yields above 10-year yields by the widest margin since the early 1980s Thursday, a sign of flagging confidence in the economy's ability to withstand additional Federal Reserve interest-rate hikes.
The yield on the shorter-dated Treasury at one point exceeded the longer-dated note's by as much as 86 basis points. The two-year rate was 4.10% on Feb. 2, before stronger-than-expected January employment data sparked a reassessment of how much higher the Fed's policy rate might need to go to stifle inflation.
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Source: bloomberg.com
CBO-Monthly Budget Review: January 2023
February 8, 2023--Summary
The federal budget deficit was $459 billion in the first four months of fiscal year 2023, the Congressional Budget Office estimates-$200 billion more than the shortfall recorded during the same period last year. Outlays were 9 percent higher and revenues were 3 percent lower from October through January than during the same period in fiscal year 2022.
Outlays in fiscal year 2023 were reduced by the shifting of certain payments-totaling $63 billion-from October 1, 2022 (the first day of fiscal year 2023), into fiscal year 2022 because October 1 fell on a weekend. If not for those shifts, the deficit would have been $522 billion, double the shortfall during the same period in fiscal year 2022.
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Source: CBO (Congressional Budget Office)
ETFs following US lawmakers' stock trades go live
February 7, 2023--NANC and KRUZ will be aligned with either Democratic or Republican Congress members' own transactions
Investors who believe that members of the US Congress have access to information that could give them a trading advantage can now trade two exchange traded funds that follow members' stock transactions.
Subversive Capital Advisor, an asset manager, and Unusual Whales, an option flow platform and data provider, on Tuesday launched the Unusual Whales Subversive Democratic ETF (NANC) and the Unusual Whales Subversive Republican ETF (KRUZ).
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Source: FT.com
Calamos Investments Announces the Listing of the Calamos Antetokounmpo Global Sustainable Equities ETF (SROI)
February 6, 2023--Launched in partnership with NBA Superstar Giannis Antetokounmpo, fund is based on one of the longest-running ESG research programs in the nation
SROI is a global stock-based ETF that seeks above-average returns with lower volatility by focusing on companies that generate potentially higher returns on capital and maintain what the advisor believes to be a competitive edge.
Fund invests in companies with strong ESG characteristics believed to be better equipped to adapt to change and potentially avoid certain liabilities, thereby contributing to return potential and risk reduction.
SROI is part of a broader partnership with NBA superstar Giannis Antetokounmpo that has committed to donating a portion of profits to charity.
Calamos Investments LLC ("Calamos"), a premier global investment provider, in partnership with Giannis Antetokounmpo, today announced the listing of the Calamos Antetokounmpo Global Sustainable Equities ETF (ticker: SROI) on NYSE ARCA. SROI seeks to deliver long-term capital appreciation through
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Source: calamos.com
