Global ETF News Older than One Year
As the ETF turns 30, it is time for active managers to embrace it
March 4, 2020--Exchange traded funds can provide greater flexibility, lower costs and ready access. The dominant narrative surrounding exchange traded funds over their 30-year history has been a kind of active-versus-indexing derby, in which investors must choose one or the other.
But that is the wrong way of looking at it. These days, there is a quiet revolution under way, in which index-tracking ETFs are used within actively managed portfolios. In an ironic twist, it is active fund managers who are now among the fastest-growing segments among users of ETFs.
Source: FT.com
Shaping the future of payments: BIS Quarterly Review
March 1, 2020--March 1, 2020--The BIS Quarterly Review takes an in-depth look at the fast-changing world of payments, explaining the strengths and weaknesses of existing systems, describing the rapid pace of technological change and its impact, and assessing new solutions.
Thanks to the speed of changes and the potential for disruption, payment systems have shot to the top of policymakers' agendas.
The BIS and central banks have a leading role in shaping policymakers' response to these changes.
The BIS and central banks have a leading role in shaping policymakers' response to these changes.
"Central banks have a core role in payment systems, and the changes under way require them to step up and play a more significant part in improving the safety and efficiency of these systems," Agustín Carstens, BIS General Manager, wrote in the introduction to this special edition of the Quarterly. "Money and payment systems are founded on trust in the currency-whether cash or digital-and this trust is something that only the central bank can ensure", he added.
Source: BIS
IMF Working Paper-Transitory and Permanent Shocks in the Global Market for Crude Oil
February 28, 2020--Summary:
This paper documents the determinants of real oil price in the global market based on SVAR model embedding transitory and permanent shocks on oil demand and supply as well as speculative disturbances. We find evidence of significant differences in the propagation mechanisms of transitory versus permanent shocks, pointing to the importance of disentangling their distinct effects.
Permanent supply disruptions turn out to be a bigger factor in historical oil price movements during the most recent decades, while speculative shocks became less influential.
view the IMF Working Paper-Transitory and Permanent Shocks in the Global Market for Crude Oil
Source: IMF
IMF Working Paper: Household Debt and House Prices-at-risk: A Tale of Two Countries
February 28, 2020--Summary:
To identify and quantify downside risks to housing markets, we apply the house price-at-risk methodology to a sample of 37 cities across the United States and Canada using quarterly data from 1983 to 2018. This paper finds that downside risks to housing markets in the United States have seemingly fallen over the past decade, while having increased in Canada.
Supply-side drivers, valuation, household debt, and financial conditions jointly play a key role in forecasting house price risks. In addition, capital flows are found to be significantly associated with future downside risks to major housing markets, but the net effect depends on the type of flows and varies across cities and forecast horizons. Using micro-level data, we identify households vulnerable to potential housing shocks and assess the riskiness of household debt.
view the IMF Working Paper: Household Debt and House Prices-at-risk: A Tale of Two Countries
Source: IMF
Private investors in trading surge as coronavirus sparks market correction
February 28, 2020--As world markets take a turn for the worse, investors use ETFs as they hope to profit from any bounceback
Source: FT.com
OECD GDP growth slows to 0.2% in the fourth quarter of 2019
February 20, 2020--Growth of real gross domestic product (GDP) in the OECD area slowed to 0.2% in the fourth quarter of 2019, compared with 0.4% in the previous quarter, according to provisional estimates. Among the Major Seven economies with data available for the fourth quarter of 2019, only the United States saw GDP increase (up 0.5%, unchanged from the previous quarter).
GDP contracted sharply in Japan (by minus 1.6%, following October’s increase in consumption tax) and also contracted in Italy (by minus 0.3%) and France (by minus 0.1%).
GDP growth slowed to zero in the United Kingdom and Germany (following growth of 0.5% and 0.2% respectively in the previous quarter) and also slowed in the euro area and in the European Union (to 0.1%, from 0.3% in the previous quarter).
Source: OECD
OECD-Corporate bond debt continues to pile up
February 18, 2020--The volume of corporate debt reached an all time high in real terms of USD 13.5 trillion at the end of 2019, driven by the return of more expansionary monetary policies early in the year. At the same time, the overall quality of corporate debt has declined, according to a new OECD report
Corporate Bond Market Trends, Emerging Risks and Monetary Policy says that non-financial companies borrowed USD 2.1 trillion in the form of corporate bonds in 2019. However, the data show that, in comparison to previous credit cycles, today's stock of outstanding corporate bonds has lower overall credit quality, higher payback requirements, longer maturities and inferior investor protection. This may amplify the negative effects that an economic downturn would have on the non-financial corporate sector and the overall economy.
Source: OECD
Finding Solid Footing for the Global Economy
February 19, 2020--As the Group of Twenty industrialized and emerging market economies (G-20) finance ministers and central bank governors gather in Riyadh this week, they face an uncertain economic landscape.
After disappointing growth in 2019, we began to see signs of stabilization and risk reduction, including the Phase 1 U.S.-China trade deal. In January, the IMF projected growth to strengthen from 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent in 2021.
This projected uptick in growth is dependent on improved performance in some emerging market and developing economies.
Monetary and fiscal policy have been doing their part. In fact, monetary easing added approximately 0.5 percentage points to global growth last year. Forty-nine central banks cut rates 71 times as part of the most synchronized monetary action since the global financial crisis.
Source: IMF
BIS-No global real estate market despite higher price synchronisation and growing role of international investors, central banks find
February 18, 2020--Although residential and commercial real estate prices are increasingly moving in sync and the role of international investors is growing, this does not mean that there is a global real estate market, a report by the Committee on the Global Financial System finds.
Property price dynamics: domestic and international drivers documents recent trends in residential and commercial property prices in over 20 countries, gives an overview of key drivers of price developments and describes policy initiatives used to manage associated risks to the economy and financial stability.
Property prices have been rising, reaching record highs in many countries. As prices appear high in comparison to simple rule-of-thumb valuation benchmarks, such as rents and incomes, some central banks are concerned about the consequences of a potential correction. In many cases, however, current price developments can be largely explained by fundamental drivers such as interest rates and income, the report finds.
Source: BIS
Bassanese Bites: Bubble trouble
February 17, 2020--Top events of the past week
Global stocks continued to shrug off coronavirus fears last week with the S&P 500 up a lazy 1.6% to reach a new record high. Reports of a possible peak in the number of new coronavirus cases was the main (positive) market development, notwithstanding a surge in reported cases in China-due to an apparent change in reporting methods.
At this stage global markets are still attempting to "look through" the viruses' hit to global growth-as it's still only likely to be short-term-though this could change if the (still relatively small) number of cases outside of China begins to rise.
Also noteworthy late last week was more Washington talk of a US "middle class tax cut" plus a proposed plan to encourage everyday American's to invest in the surging stock market. This could be just the talk Wall Street could latch onto to support a further rally this year, especially if looks like Trump will win in a canter.
Source: Betashares
