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OFR-The Intersection of U.S. Money Market Mutual Fund Reforms, Bank Liquidity Requirements, and the Federal Home Loan Bank System
October 31, 2017--After the financial crisis, reforms of money market funds and changes to banks' liquidity requirements had an unintended consequence of increased Federal Home Loan Banks' reliance on short-term funding from money market funds to finance longer-term loans and other assets.
This increase could make the financial system more vulnerable and pose risks to financial stability. (Working Paper no. 17-05)
Executive Summary
The most recent changes to money market fund regulations have had a strong impact on the money fund industry. In the months leading up to the compliance date of the core provisions of the amended regulations, assets in prime money market funds declined significantly, while those in government funds increased contemporaneously.
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Source: OFR (Office of Financial Research)
IMF Working paper-How Financial Conditions Matter Differently across Latin America
October 30, 2017--Summary:
This paper develops comparable financial conditions indices (FCIs) for the six large and most financially-integrated Latin American economies (LA6) by following Korobilis (2013) and Koop and Korobilis (2014).
The main findings are as follows. First, the estimated FCIs are influenced by a commodity cycle, a global financial cycle, as well as country-specific episodes of financial distress. Second, by early 2017, financial conditions remained favorable in most LA6 economies relative to historical standards. Third, the impact of financial shocks on economic activity widely varies across LA6 and is otherwise found to be stronger in periods of financial stress. Fourth, exposure to regional financial spillovers also differs across LA6.
view the IMF Working paper-How Financial Conditions Matter Differently across Latin America
Source: IMF
Franklin Templeton Introduces First Suite of Passive ETFs
October 30, 2017-- Franklin Templeton Investments today announced that it will introduce its first passive ETFs, with an initial suite of 16 single country and regional market-cap weighted ETFs.
These ETFs will be listed on NYSE Arca on Monday, November 6, in one of the largest simultaneous listings on the NYSE in the last decade.
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Source: Franklin Templeton Investments
AdvisorShares Weekly Market Review-Get Ready For #MACtion
October 30, 2017--Highlights of the Week Ending 10/27/2017
Macro
Markets mostly moved higher last week with the Dow Jones Industrial Average going up 0.45%, the S&P 500 moved ahead 0.23% and the NASDAQ gained 1.09%. Small caps struggled, dipping 0.06%. The weekly changes mask the bigger story from Friday as the NASDAQ jumped 2.20%, getting a lift from several mega cap (is there a word that is bigger than mega?) stocks that reported very well received earnings data.
These four or five stocks also dragged the S&P 500 higher by 0.81% on Friday. This, of course, plays into the idea of narrowing leadership, which on its face is a negative indicator but for now, the market shows no real signs of rolling over but to be clear there are fewer stocks propping up the indexes.
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Source: AdvisorShares
Economy Statement for the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association
October 30, 2017--Despite a battering by three major hurricanes in August and September, the U.S. economy held a steady course and looks increasingly poised to enter its ninth straight year of economic expansion on a strong footing.
Newly released data for the third quarter show real GDP growing at an annual rate of 3.0 percent, just a touch under the second quarter's 3.1 percent pace. Growth of personal consumption expenditures, although a bit slower than in the second quarter, remained the core driver of overall growth, while nonresidential fixed investment continued to advance and net exports made a significant contribution to growth.
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Source: US Department of the Treasury
ETFMG Sued by Nasdaq for cutting HACK etf fee to benefit shareholders and dumping Nasdaq index.
Nasdaq refused to address irreconcilable conflicts of interest
October 27, 2017--A letter from ETF Managers Group LLC & the legal team led by Sean Coffey of Kramer Levin Naftalis & Frankel LLP:
Although ETFMG has not yet been served with a complete copy of the complaint with exhibits, the lawsuit filed against us this week by NASDAQ is frivolous and based on a gross mischaracterization of the relationships and agreements at issue.
Suffice it to say that the relationships between and among ETFMG, PureFunds, and ISE were mutually beneficial and profitable for all concerned. That changed when NASDAQ entered the picture as ISE's successor in the relevant relationships, as will be made clear when we vigorously defend this baseless suit.
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Source: ETF Managers Group LLC
Research Affiliates-The Bubble That Never Came (and Other Misconceptions about Treasury Bonds)
October 27, 2017--Key Points
Contrary to common wisdom, we show that low yields do not imply that US Treasury securities are expensive.
After accounting for macroeconomic trends, Treasury bonds are only moderately overvalued.
A proper valuation of the bond market requires going beyond simply blaming the Fed's unprecedented policies of monetary easing.
Given their recent negative correlation with stock returns, Treasury bonds may not be as unattractive as one might think.
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Source: Research Affiliates
Renaissance Capital Scheduled U.S. IPOs this week
October 27, 2017--Scheduled U.S. IPOs-Week of 10/30/17
IPO Commentary
US IPO Weekly Recap: 4 growth IPOs price above the range and average a first day pop of 20%
Four growth deals all priced above their respective ranges and traded up on their market debut.
Notably, next-generation database company MongoDB priced above its upwardly-revised midpoint and...
IPO Activity
There have been 123 IPOs priced so far this year, a +31% change from last year.
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Source: Renaissance Capital
First reading on third-quarter GDP up 3.0%, vs 2.5% rise expected
October 27, 2017--The U.S. economy unexpectedly maintained a brisk pace of growth in the third quarter.
An increase in inventory investment and a smaller trade deficit offset a hurricane-related slowdown in consumer spending and a decline in construction.
Gross domestic product increased at a 3.0 percent annual rate in the July-September period after expanding at a 3.1 percent pace in the second quarter
The U.S. economy unexpectedly maintained a brisk pace of growth in the third quarter as an increase in inventory investment and a smaller trade deficit offset a hurricane-related slowdown in consumer spending and a decline in construction.
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Source: CNBC.com
CFTC.gov Commitments of Traders Reports Update
October 27, 2017--The current reports for the week of October 24, 2017 are now available.
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Source: CFTC.gov
