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How the US Inflation Reduction Act will impact the economy
November 2, 2022--New US legislation will dramatically change the economics of industrial decarbonization.
Critics of the Inflation Reduction Act claim that it will increase inflation by pushing up energy prices.
In fact, the new laws do not exacerbate inflation now, and are likely to have a deflationary impact in the long term.
The Inflation Reduction Act (IRA) is widely recognized as a compelling nudge from the US government to private sector and investors to decarbonize hard-to-abate sectors. It clears the path for many climate financiers and investors to move companies towards net zero. But can its incentive-based policies work in the context of a looming recession, spiking inflation, and oil shortage?
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Source: weforum.org
Federal Reserve issues FOMC statement
November 2, 2022--Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months,and the unemployment rate has remained low. Inflation remains elevated,reflecting supply and demand imbalances related to the pandemic,higher food and energy prices,and broader price pressures.
Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals,the Committee decided to raise the target range for the federal funds rate to 3-3/4 to 4 percent. The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range,the Committee will take into account the cumulative tightening of monetary policy,the lags with which monetary policy affects economic activity and inflation,and economic and financial developments.
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Source: federalreserve.gov
SEC Proposes Enhancements to Open-End Fund Liquidity Framework
November 2, 2022--The Securities and Exchange Commission today voted to propose amendments to better prepare open-end funds for stressed conditions and to mitigate dilution of shareholders' interests. The rule and form amendments would enhance how funds manage their liquidity risks, require mutual funds to implement liquidity management tools, and provide for more timely and detailed reporting of fund information.
"A defining feature of open-end funds is the ability for shareholders to redeem their shares daily, in both normal times and times of stress," said SEC Chair Gary Gensler. "Open-end funds, though, have an underlying structural liquidity mismatch. This can raise issues for investor protection, our capital markets, and the broader economy. We saw such systemic issues during the onset of the COVID-19 pandemic, when many investors sought to redeem their investments from open-end funds. Today's proposal addresses these investor protection and resiliency challenges."
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Source: SEC.gov
Client First Tax & Wealth Advisors Announces New Adaptiv Select ETF (Ticker: Adpv); a Proprietary Actively Managed, Large Cap Stock Selection ETF
November 2, 2022--Client First Tax & Wealth Advisors announced today it is in the pre-effective stage of launching its first exchange traded fund (ETF); Adaptiv Select ETF (ticker: ADPV).
Client First, an independent Registered Investment Advisor located in West Bend, Wisconsin, is working with strategic partners US Bank, Exchange Traded Products (ETC), and Quasar Distributors to bring the Momentum-based large-cap stock selection strategy to life within the tax efficient exchange traded vehicle.*
"As we enter the active ETF space, we are excited about the full roster of strategic experts we are partnering with," said Paul Zarling, Managing Partner at Client First.
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Source: Client First Tax & Wealth Advisors
U.S. SEC proposes new liquidity, pricing rules for mutual funds
November 2, 2022--The U.S. Securities and Exchange Commission on Wednesday proposed new rules aimed at better preparing the mutual fund industry for distressed market conditions, including a new pricing mechanism that has drawn opposition from fund managers.
The market disruptions of March 2020 reinforced the fact that liquidity can deteriorate rapidly, said the SEC, which adopted the proposal in a 3-2 vote.
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Source: reuters.com
US ETFs draw almost $500bn of inflows despite grim year for Wall St
November 2, 2022--Fresh surge in new client money contrasts $790bn suffered by mutual funds
US exchange traded funds have pulled in almost $500bn in new client money this year as investors continue a powerful shift into the vehicles despite a historic pullback in stock and bond markets.
The inflows are well below last year's full-year tally of $935bn but in line to overtake the record before that of $501bn in 2020, according to data from the Investment Company Institute through October 26. In contrast, long-term US mutual funds -which exclude vehicles that act as alternatives to holding cash-have seen net outflows of $790bn in 2022, far worse than the decline of $59bn last year and $484bn in 2020.
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Source: ft.com
IMF-Western Hemisphere Regional Economic Outlook: Navigating Tighter Global Financial Conditions
November 2, 2022--Growth momentum continues in Latin America and the Caribbean, and the region is expected to grow by 3.5 percent in 2022. Amid tightening global financial conditions, however, growth is projected to decelerate to 1.7 percent in 2023.
Inflation is the highest in two-decades and is expected to recede gradually helped by decisive action by the region's central banks.
Monetary policy should stay the course, and avoid easing prematurely, while fiscal policy should focus on strengthening public finances while protecting the vulnerable population from the inflation shock.
Recent developments in Latin America and the Caribbean have been dominated by the impact of two distinct global shocks: the COVID-19 pandemic and the Russian invasion of Ukraine. A third shock-tightening global financial conditions-is now shaping the outlook for the region, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for the Western Hemisphere .
After contracting sharply in 2020, most of the economies in Latin America and the Caribbean recovered strongly in 2021 and early 2022, helped by the global recovery, the normalization of service sectors, and favorable external conditions, including high commodity prices. Strong momentum early in the year led to an upward revision of growth to 3.5 percent for 2022- half percentage point higher than projected in July.
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Source: imf.org
AllianzIM Expands Lineup of U.S. Large Cap Buffered ETFs
November 1, 2022--AllianzIM Launches More Buffered ETFs with Outcome Periods for Every Month Beginning November 1
Allianz Investment Management LLC (AllianzIM), a wholly-owned subsidiary of Allianz Life Insurance Company of North America (Allianz Life(R)), announced today it is launching its monthly series of U.S. Large Cap Buffered Exchange Traded Funds (ETFs) suite, starting with new November funds.
The two new ETFs are the AllianzIM U.S. Large Cap Buffer10 Nov ETF (NYSE Arca: NVBT) and the AllianzIM U.S. Large Cap Buffer20 Nov ETF (NYSE Arca: NVBW).
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Source: Allianz Investment Management LLC
Indxx Adds 15 New Indices to its Product Offerings
October 31, 2022--Indxxis pleased to announce the expansion of its product suite with the launch of 15 new indices. The new indices encompass a broad set of index types including income, quality, strategy, and thematic indices. Below is the detailed list:
Income
1. Indxx Emerging Markets High Dividend Index
2.Indxx US Dominant Dividend Consistency Index
3.Indxx Global High Income Index
4.Indxx Global High Income Index 2X Leveraged
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Source: indxx.com
IMF Working Paper-Understanding U.S. Inflation During the COVID Era
October 28, 2022--Summary:
This paper analyzes the dramatic rise in U.S. inflation since 2020, which we decompose into a rise in core inflation as measured by the weighted median inflation rate and deviations of headline inflation from core. We explain the rise in core with two factors, the tightening of the labor market as captured by the ratio of job vacancies to unemployment, and the pass-through into core from past shocks to headline inflation.
The headline shocks themselves are explained largely by increases in energy prices and by supply chain problems as captured by backlogs of orders for goods and services. Looking forward, we simulate the future path of inflation for alternative paths of the unemployment rate, focusing on the projections of Federal Reserve policymakers in which unemployment rises only modestly to 4.4 percent.
We find that this unemployment path returns inflation to near the Fed's target only under optimistic assumptions about both inflation expectations and the Beveridge curve relating the unemployment and vacancy rates. Under less benign assumptions about these factors, the inflation rate remains well above target unless unemployment rises by more than the Fed projects.
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Source: imf.org
