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Congressional Budget Office-Inflation and Income
September 1, 2021--CBO addresses how household income is affected when inflation exceeds the growth of labor income, who pays higher taxes when inflation rises, and how high and unexpected inflation affects economic growth
This letter addresses the three questions that the Honorable Jason Smith asked about the effects of high inflation.
You asked how household income is affected when inflation exceeds the growth of labor income. Inflation has eroded the purchasing power of families. From the second quarter of 2020 through the second quarter of 2021, compensation per hour of work (as measured by the employment cost index for workers in private industry) increased by 3.1 percent.
Over the same period, the price index for personal consumption expenditures (which the Federal Reserve uses to define its 2 percent long-run goal for inflation) increased by 3.9 percent. The purchasing power of compensation for an hour of work has therefore declined by about 0.7 percent over the past year. A year ago, the Congressional Budget Office did not project that the erosion of purchasing power would occur.
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Source: CBO(Congressional Budget Office)
Traders Sour on Clean Energy as Bets Against Invesco ETF Surge
August 30, 2021--A hot Wall Street trade is cooling down as supply-chain chaos emboldens short bets against one of Invesco Ltd.'s clean-energy ETFs.
With the green industry facing all manner of logistical snafus, as many as 9.9% of outstanding shares in the $3 billion Solar ETF (ticker TAN) were on loan to short sellers last week, according to data from IHS Markit Ltd. That's the highest level since April, when short interest reached 10.1% just before the fund slumped 25%.
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Source: bnnbloomberg.ca
ETF pioneer Grossman urges asset managers to adopt direct indexing
August 30, 2021--Former iShares chief says investment houses are often slow to consider new technology.
Grossman said established investment houses must adapt to the phenomenon. "A lot of assets are tied up in traditional, actively managed and...
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Source: FT.com
CBO's Model and Projections of U.S. International Investment Holdings and Income Flows: Working Paper 2021-10
August 27, 2021--Projections from CBO's international financial forecasting model show the U.S. net international investment position rising modestly over the 10-year forecast period. Net international income is expected to rise as a share of GDP through 2023 before declining through 2031.
Summary
Since 1982, growth in the value of foreign investments in the United States has exceeded growth in the value of U.S. investments abroad and, as a result, the U.S. net international investment position has been negative and trending lower.
Even though the value of foreign investments in the United States has exceeded the value of U.S. investments abroad, the total income earned by U.S. investors on their foreign asset holdings has historically exceeded the total income earned by foreign investors on their U.S. holdings. The United States is able to earn positive net international income despite its negative net international investment position because the average yield on U.S. investments abroad has exceeded the average yield on foreign investments in the United States.
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Source: CBO (Congressional Budget Office)
Pressure builds on active funds fees after ETF price war
August 27, 2021--Overall expense ratios across all funds have halved over the past two decades
Fierce price competition between ETF providers who have knocked out fees for passive products is currently having a significant impact on actively managed funds, according to a new Morningstar study.
According to an annual survey, the average expense ratio consists of management fees and other ongoing costs to own a fund, from 0.93% to 0.41% of total investment....
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Source: FT.com
Regulators urge banks to assess risk in teaming with fintechs
August 27, 2021--Federal regulators on Friday issued new guidance to help community banks assess risk as they increasingly consider partnering with financial technology companies to meet customers' evolving digital preferences.
The Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency released a guide suggesting that banks consider six key pillars of due diligence when evaluating potential fintech partners. Banks should assess a fintech's: business experience and qualifications; financial condition; compliance with laws and regulations; risk management and control processes; information security; and operational resilience, according to the guide.
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Source: americanbanker.com
Actively Managed Sector ETF Strategy Launched on NYSE
August 26, 2021--Seeks Capital Appreciation with a Goal to Generate Alpha Against Traditional U.S. Large Cap Benchmarks
The Revere Sector Opportunity ETF (NYSE: RSPY) began trading on the New York Stock Exchange on August 24, 2021.
"Using our proprietary process overlayed across the eleven sectors of the S&P 500 Index, we identify expected leadership through technical and macro analysis as well as options intelligence", commented Scott Fullman, Portfolio Manager and Managing Director, Revere Wealth Management LLC ("Revere"), who serves as the Sub-Adviser to RSPY.
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Source: Revere Securities LLC
US slightly upgrades GDP estimate for last quarter to 6.6%
August 26, 2021--The U.S. economy grew at a robust 6.6% annual rate last quarter, slightly faster than previously estimated, the government said Thursday in a report that pointed to a sustained consumer-led rebound from the pandemic recession. But worries are growing that the delta variant of the coronavirus is beginning to cause a slowdown.
The report from the Commerce Department estimated that the nation's gross domestic product- its total output of goods and services-accelerated slightly in the April-June quarter from the 6.5% it had initially reported last month. The economy's expansion last quarter followed a solid 6.3% annual growth rate in the January-March period.
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Source: apnews.com
Global X Launches Six Options-based ETFs Focusing on Income and Risk Management Outcomes
August 26, 2021--Global X ETFs, the New York-based provider of exchange traded funds (ETFs), today announced the launch of three pairs of ETFs that employ options-based strategies in an effort to help investors achieve specific outcomes, such as generating income in a low yield environment and managing downside risks amid bouts of elevated volatility.
Each pair of funds includes both a Nasdaq 100 and S&P 500 Index-based version.
Fund Name: Global X Nasdaq 100(R) Risk Managed Income ETF
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Source: Global X
Capital Group joins rivals in rush to launch active ETFs
August 25, 2021--US investment house opts for fully transparent structure made popular by Cathie Wood's Ark funds.
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Source: FT.com
