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Short the Target: The Specialist Funds Betting M&A Deals Won't Close
June 1, 2020--Some hedge funds that wager on mergers and acquisitions are taking an unusual approach to navigating the uncertainty caused by the new coronavirus: They're betting against the target.
For these so-called merger-arbitrage investors, this marks a big shift in strategy. They typically make money by buying up the stock of target companies in M&A deals, betting the share price will rise after a combination is announced and nears completion.
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Source: wsj.com
A Tug-of-War Between Bulls and Bears Is Muddling Risk Indicators
June 1, 2020--It used to be understood that if haven assets rise, then the risky ones would fall. Now, with both rallying, investors are having to rethink their playbooks.
The explosive recovery for U.S. stocks stands out against a commensurate rally for gold, which acts as an inflation hedge as well as a safe play.
Equities in both the euro area and Britain entered bull markets in recent weeks, even as demand for top-rated government debt pushed German yields further below zero and took the U.K.'s negative for the first time.
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Source: bnnbloomberg.ca
U.S. Economy Faces Long Recovery From Coronavirus Effects, Experts Say
June 1, 020--Surveys of purchasing managers in U.S., Asia and Europe offer some hope that decline in factory activity is starting to bottom out
The U.S. economy could take the better part of a decade to fully recover from the coronavirus pandemic and related shutdowns, a U.S. budget agency said, as a series of surveys pointed to continuing weakness in global manufacturing.
The Congressional Budget Office, a nonpartisan legislative agency, said the sharp contraction triggered by the coronavirus caused it to mark down its 2020-30 forecast for U.S. economic output by a cumulative $7.9 trillion, or 3% of gross domestic product, relative to its January projections. GDP...
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Source: wsj.com
Allianz Launches Two ETFs in Hotly Contested Market Niche
June 1, 2020--AZAA and AZBA begin trading Monday on NYSE Arca exchange
Defined-outcome ETFs growing in popularity amid volatility
Allianz Investment Management is stepping into a growing corner of the $4 trillion ETF market with two funds that protect against stock losses.
The AllianzIM U.S. Large Cap Buffer10 Apr ETF, or AZAA, and the AllianzIM U.S. Large Cap Buffer20 Apr ETF, or AZBA, begin trading Monday. The exchange-traded funds will seek to track S&P 500 Price Return Index up to a stated cap on gains, while shielding investors against the first 10% and then 20% of losses should the gauge drop. So-called buffer funds--a space dominated by niche issuer Innovator ETFs--have attracted over $2 billion worth of inflows so far in 2020.
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Source: bloomberg.com
Comparison of CBO's May 2020 Interim Projections of Gross Domestic Product and Its January 2020 Baseline Projections
June 1, 2020--Nominal GDP
In the May 2020 report, CBO projected that the level of nominal GDP in the second quarter of 2020 would be $790 billion (or 14.2 percent) lower than the agency had previously forecast in January 2020. The two largest differences between the two forecasts result from the economic effects of the COVID-19 pandemic in reducing output and the legislation enacted between January and early May in response, which partly offsets that reduction.
Subsequently, the difference between those projections of nominal GDP narrows from $533 billion (9.4 percent lower in the May projection) by the end of 2020 to $181 billion (2.2 percent lower) by 2030. As a result of those differences, CBO projects that over the 2020-2030 period, cumulative nominal output will be $15.7 trillion less than what the agency projected in January. That difference constitutes 5.3 percent of the value for cumulative nominal GDP for that period that the agency projected in January.
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Source: CBO (Congressional Budget Office)
Indxx 5G & NextG Thematic Index Licensed by First Trust for Exchange Traded Fund
May 30, 2020--Indxx is pleased to announce the Indxx 5G & NextG Thematic Index (the "Index") has been licensed to US-based ETF provider First Trust Advisors as the underlying benchmark for the First Trust Indxx NextG ETF (NASDAQ:NXTG), which began trading today.
The Index (ticker:INXTG) is designed to track the performance of companies that are at the core of the research and development of the new 5G cellular technology and next generation technologies as they emerge. The Index seeks to include only companies that have devoted material resources or made material commitments to the use of 5G technology. 5G is the next (fifth) generation of cellular technology, which promises to greatly enhance the speed, coverage and responsiveness of wireless networks.
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Source: Indxx
CFTC.gov Commitments of Traders Update
May 29, 2020--The current reports for the week of May 26, 2020 are now available.
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Source: CFTC.gov
Fed's corp bond facility bought 15 ETFs in first days of operations
May 29, 2020--The Federal Reserve's new facility for corporate bond purchases bought about $1.3 billion of shares in 15 exchange-traded funds in its first week of operation through 158 trades, data released Friday showed.
The Secondary Market Corporate Credit Facility made the purchases from 10 securities firms between its launch on May 12 and May 18, the data showed in the Fed's first detailed disclosure of the SMCCF’s transactions. Its largest holding as of May 19 was the iShares Iboxx US Dollar Investment Grade Corporate Bond ETF at $326.3 million. (Reporting By Dan Burns)
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Source: Reuters
This Mutual-Fund-to-ETF Conversion Will Be an Important Test of Active Management
May 28, 2020--Guinness Atkinson Dividend Builder is a solid mutual fund with modest fees that has beaten its world-stock-fund peers in the past five years, yet no one seems to care. The fund has only $15 million in assets. The question is: Would you take notice of it were an exchange-traded fund instead?
If all goes as planned, investors will find out as the fund (ticker: GAINX) and a sister fund-Guinness Atkinson Asia-Pacific Dividend Builder (GAADX)-will be the first mutual funds to convert to an ETF structure. They will become, respectively, SmartETFs Dividend Builder and SmartETFs Asia Pacific Dividend Builder, according to a preliminary prospectus filed with the Securities and Exchange Commission on May 15.
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Source: barrons.com
Trade-war cost to U.S. market cap was US$1.7 trillion, study says
May 28, 2020--The U.S. trade war with China cut US$1.7 trillion from the market value of listed American firms and will reduce their investment growth rate by almost two percentage points by year-end, according to a report highlighted by the Federal Reserve Bank of New York.
Higher tariffs weakened investment expansion by 0.3 percentage point through the end of 2019 and will subtract another 1.6 percentage points this year, according to the report by economists Mary Amiti, a vice president at the New York Fed, and Columbia University’s Sang Hoon Kong and David Weinstein.
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Source: bnnbloomberg.ca
