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Coronavirus savages U.S. economy in first quarter; bigger hit still to come
April 29, 2020--The U.S. economy contracted in the first quarter at its sharpest pace since the Great Recession as stringent measures to slow the spread of the novel coronavirus almost shut down the country, ending the longest expansion in the nation's history.
The drop in gross domestic product (GDP) reported by the Commerce Department on Wednesday reflected a plunge in economic activity in the last two weeks of March, which saw millions of Americans seeking unemployment benefits. The rapid decline in GDP reinforced analysts’ predictions that the economy was already in a deep recession and left economists bracing for a record slump in output in the second quarter.
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Source: reuters.com
CBO's Current Economic Projections and a Preliminary Look at Federal Deficits and Debt for 2020 and 2021
April 27, 2020--Summary
On April 28, Phill Swagel, CBO's Director, will discuss with the House Budget Committee the agency's current economic projections for 2020 and 2021, as well as its preliminary assessment of federal budget deficits and debt in those years.
CBO projects that the nation's output will decline sharply in the second quarter of this year and begin to rise thereafter. As a result, real GDP in the fourth quarter of 2020 is expected to be 5.6 percent lower than it was in the fourth quarter of 2019. The unemployment rate is expected to average 15 percent in the second and third quarters of 2020, higher than at any point since the early 1930s. By the third quarter of this year, about 28 million fewer people will be employed and about 9 million fewer people will be in the labor force than CBO projected in January.
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Source: CBO (Congressional Budget Office)
Liquid Alternatives: BNY Mellon Launches Five New ETFs at Low or Zero Fees
April 27, 2020--Counting the three plain vanilla ETFs launched earlier this week, the launch brings BNY Mellon's ETF tally up to eight.
BNY Mellon has a 30-year track record in indexation and industry leadership in ETF sub-advisory services. Its index team currently manages $340bn for institutional and retail clients globally. Further, as of April 16, it had $1.8 trillion in AUM.
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Source: dailyalts.com
Is USO an actively managed fund now?
April 27, 2020--Exchange traded products that can self-determine whether they trade passively or more actively introduce all sorts of new risks for investors and the wider market.
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Source: FT.com
Markets Diverge in Assessing the Economic Freeze
April 26, 2020--Stocks show anticipation of a quick return to growth, while oil markets price in a longer downturn.
Stocks continue to rise despite an unprecedented freeze in global economic activity and an oil-price crash, a divergence that makes some investors skeptical the gains can continue.
The S&P 500 has baffled many investors by rebounding 27% since March 23 even as job losses have mounted. The broad equity gauge is now only down about 3% in the past year, with recent gains led byAmazon.com Inc. and Netflix Inc.
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Source: wsj.com
NYSE eyes reopening trading floor, but timeline still unclear
April 24, 2020-- The New York Stock Exchange plans to reopen its iconic trading floor, which is shuttered due to coronavirus concerns, as soon as possible, but it has not yet set a date to do so, the NYSE and people familiar with the matter said on Friday.
"The NYSE will reopen its trading floors when we can do so with reduced risk and without adding strain on local healthcare systems," exchange spokesman Farrell Kramer said in a statement, without giving further details. The exchange operator also has an options trading floor in San Francisco that is closed due to the pandemic.
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Source: Reuters
CBO's Current Projections of Output, Employment, and Interest Rates and a Preliminary Look at Federal Deficits for 2020 and 2021
April 24, 2020--CBO has developed preliminary projections of key economic variables through the end of calendar year 2021, based on information about the economy that was available through yesterday and including the effects of an economic boost from legislation recently enacted in response to the pandemic.
In addition, CBO has developed a preliminary assessment of federal budget deficits and debt for fiscal years 2020 and 2021. CBO will provide a comprehensive analysis of that legislation and updated baseline budget projections later this year.
In the second quarter of 2020, the economy will experience a sharp contraction, and CBO's current economic projections include the following:
Inflation-adjusted gross domestic product (real GDP) is expected to decline by about 12 percent during the second quarter, equivalent to a decline at an annual rate of 40 percent for that quarter.
The unemployment rate is expected to average close to 14 percent during the second quarter.
Interest rates on 3-month Treasury bills and 10-year Treasury notes are expected to average 0.1 percent and 0.6 percent, respectively, during that quarter.
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Source: Congressional Budget Office
Pandemic may boost state pension plan debt to $1.7 trillion
April 23, 2020--Recent market declines as a result of the coronavirus pandemic could cause state pension funds to suffer increased losses of $500 billion, which would bring the overall state pension debt to $1.7 trillion and the aggregate funding gap to an all-time high, analysis from Pew Charitable Trusts said.
Greg Mennis, director of Pew Charitable Trusts' public sector retirement systems project, noted in his analysis that most public plans are on track to face fiscal year losses for the first time since 2009 due to equity markets recent decline.
"In the aggregate, they are currently short of annual return targets by 10% to 15%," Mr. Mennis wrote.
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Source: pionline.com
Oil for Less Than Nothing? Here's How That Happened
April 20, 2020--April 20, 2020 will go down in oil-market history as the day when the U.S. benchmark price for crude dropped below zero for the first time--and then kept falling. In a massive and unprecedented swing, the future contracts for May delivery of West Texas Intermediate tumbled to minus $37.63 a barrel.
The jaw-dropping development was in no small measure down to an extreme glitch in the way oil futures operate. But it also revealed a fundamental truth about the oil market in the age of coronavirus and the aftermath of a price war: The world's most important commodity is quickly losing all value as chronic oversupply overwhelms the world’s crude tanks, pipelines and supertankers.
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Source: bloomberg.com
WisdomTree to Close and Liquidate 10 ETFs: Portfolio Products
April 20, 2020--WisdomTree is closing and liquidating 10 of its exchange-traded funds after a review of its fund family, the firm said.
Three ETFs trade on the Cboe: the WisdomTree Dynamic Long/Short U.S. Equity Fund (DYLs), Europe Multifactor Fund (EUMF) and Japan Multifactor Fund (JNMF).
Three trade on the NYSE Arca: Asia Pacific ex-Japan Fund (AXJL), ICBCCS S&P China 500 Fund (WCHN), and Yield Enhanced Global Aggregate Bond Fund (GLBY), and four trade on Nasdaq: Middle East Dividend Fund (GULF), Emerging Markets Consumer Growth Fund (EMCG), Negative Duration High Yield Bond Fund (HYND and Negative Duration U.S. Aggregate Bond Fund (AGND).
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Source: thinkadvisor.com
